The EUR/USD pair moved slightly higher during Friday’s Asian trading session, July 3, recovering after a modest pullback from the 1.1470 area, its highest level in nearly two weeks. The currency pair remained around the mid-1.1400s, putting it on track for its first weekly gain in three weeks.
The latest upside comes as the US Dollar continues to face pressure. Investors have reduced expectations that the US Federal Reserve will raise interest rates, weakening demand for the greenback and providing support for the euro. Although EUR/USD has regained some strength, technical signals indicate that the rally still faces important obstacles.
The pair recently failed to break above the 23.6% Fibonacci retracement level of the April to June decline. It also encountered resistance near the upper boundary of an ascending price channel, an area that may be forming a bearish flag pattern. This setup often signals the possibility of another downward move if buyers fail to gain momentum.
Adding to the cautious outlook, EUR/USD remains below the 200-period Exponential Moving Average on the four-hour chart, an important technical level that continues to act as resistance. Despite the resistance, momentum indicators are becoming more supportive.
The Relative Strength Index remains just below 60, indicating moderate buying momentum without entering overbought territory. At the same time, the Moving Average Convergence Divergence histogram has turned slightly positive, suggesting bullish momentum is gradually improving.
However, traders may prefer to wait for a confirmed breakout above the 23.6% Fibonacci retracement level before expecting a stronger recovery.
Key Resistance Levels to Watch
If buyers manage to push EUR/USD higher, the first resistance is located near 1.1466, which marks the upper boundary of the ascending channel.
Beyond that, attention shifts to the 200 period EMA around 1.1516 and the 38.2% Fibonacci retracement level at 1.1525. A successful break above these barriers could open the door for additional gains toward 1.1587 and 1.1649. On the downside, initial support is found near 1.1371, where the lower boundary of the ascending channel currently sits.
If selling pressure increases, the next significant support lies around 1.1325, an area that previously marked the beginning of the current recovery and could provide a stronger floor for buyers.
