Bearish Momentum Could Extend Down to 0.618 Fibonacci Retracement Level

Summary:

Price rejected lower from local resistance at 1.1617 and closed back below the 100-period moving average; consequently, it could extend its downside move toward the next local support zone at 1.1472

Sell EURUSD

EXP

Trading

1.15906

ENTRY

1.14750

TGT

1.16750

1.15805 -0.00107 -0.09%

Point

Flat

1.14750

TGT

CLOSING

1.15906

ENTRY

1.16750

U.S. Treasury Secretary Scott Bessent stated on Tuesday that Japan is applying appropriate measures to support its economy, noting that G20 finance ministers share the objective of fostering stronger global economic growth.

However, Bessent warned that uncertainty remains over whether G20 members will be prepared to adopt the necessary steps to achieve that goal. Additionally, he emphasized the need to protect trade and industrial employment against rising exports from China, reflecting growing concerns among several developed economies regarding manufacturing competitiveness.

On the geopolitical front, explosions were reported in southern Iran, while U.S. President Donald Trump confirmed that the U.S. Air Force carried out strikes aimed at reducing Tehran's ability to deploy missiles and lay naval mines in the Strait of Hormuz. Trump further asserted that the strategic waterway is "currently mine-free," noting that mines were either cleared or destroyed.

On the monetary policy front, markets continue reacting to remarks by Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium. Warsh emphasized that if inflation remains persistently high, the Federal Reserve still has "work to do," reinforcing expectations of a restrictive monetary stance for longer.

His comments prompted a significant shift in market expectations. Prior to his speech, the probability of a rate hike at the September meeting stood below 40%. Currently, the CME FedWatch tool assigns roughly a 68% probability to a rate increase at the September 16 policy meeting.

This shift in expectations has pushed U.S. Treasury yields higher. The benchmark 10-year yield trades near 4.79%, approximately four basis points above the previous session and at its highest level since January 2025, marking five consecutive sessions of selling pressure. Meanwhile, the 2-year yield advanced nearly five basis points to trade around 4.39%.

In Europe, data published by Eurostat showed that Eurozone inflation held steady in August. The preliminary Harmonized Index of Consumer Prices (HICP) recorded an annual variation of 3.3%, unchanged from July and in line with market consensus. However, core inflation moderated to 2.4% year-over-year from 2.5% previously, coming in slightly below forecasts.

On the other hand, select economic indicators provided mixed signals for the region. The HCOB Eurozone Manufacturing PMI was confirmed at 52.7 points for August, staying within expansionary territory. However, German retail sales disappointed the market significantly by contracting 3.4% month-over-month in July—the largest decline in over four years and well below expectations of a 0.4% expansion—pointing to a pullback in consumer spending within the region's largest economy. Bearish Momentum Could Extend Down to 0.618 Fibonacci Retracement Level_1

Bearish Momentum Could Extend Down to 0.618 Fibonacci Retracement Level_1

Technical Analysis

EURUSD has initiated a downward movement after reaching a local peak of 1.1713 on August 21. This correction could extend further, as price recently consolidated around the 100-period moving average at 1.1609, while the 200-period average sits at 1.1534. For now, price rejected lower from local resistance at 1.1617 and closed back below the 100-period moving average; consequently, it could extend its downside move toward the next local support zone at 1.1472, where a rejection zone may form as this support aligns with the 0.618 Fibonacci retracement level.

Turning to the oscillators, the RSI currently sits at 36, near oversold territory. Although it recently recovered from deeper oversold levels while price barely moved, this structure suggests downside momentum could resume. Meanwhile, the MACD presents a shallow bearish histogram following a recent crossover, while the signal lines remain below the neutral threshold, adding further weight to the view that the path of least resistance remains to the downside.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1589

Target price: 1.1475

Stop loss: 1.1675

Validity: Sep 15, 2026 15:00:00

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