Wondering where the Euro is headed against the US Dollar? The charts are telling two different stories right now, creating a complex but opportunity-rich environment for traders. While the long-term picture for the EUR/USD looks incredibly bullish, several short-term signals are pointing to an imminent pullback. Let’s break down the evidence and identify the key price levels to watch.

The Big Picture: A Long-Term Bullish Trend is Forming 🐂

From a long-term perspective, the weekly Elliott Wave chart indicates the EUR/USD has completed a major corrective phase (Wave (II)) and has embarked on a new primary uptrend. The chart shows the completion of the first significant impulsive wave up, labeled as Wave (1) of a higher degree.

This structure implies that the foundational trend for the coming months—and potentially years—is to the upside. The market is now positioned for a larger Wave (3) advance, which in Elliott Wave theory is typically the longest and most powerful move.

The Immediate Hurdle: Why a Short-Term Correction Looks Likely 🐻

In stark contrast to the long-term view, the immediate outlook is decidedly bearish. This is supported by a combination of wave analysis, technical indicators, and historical patterns.

Elliott Wave Analysis (15-Minute Chart): The short-term chart shows the market has completed a five-wave impulsive sequence upwards (labeled (v)). This likely marks the peak of the larger Wave (1). The price action has since turned corrective, printing a clear series of lower lows and lower highs. This signals the beginning of a corrective phase—most likely the A-B-C structure of a larger Wave (2) correction.

Technical Indicators: On the broader forex chart, the price is stalling near the recent high of 1.1830. The Z-Score indicator (a momentum measure) is rolling over from elevated levels, suggesting upward momentum is fading. More significantly, the sentiment indicator has turned decisively negative to -7.00, pointing to widespread bearish sentiment among traders.

Seasonality: Historical data provides another headwind. The analysis shows that July is historically the worst-performing month for EUR/USD, with an average loss of -0.05%. This seasonal tendency aligns perfectly with the other signals pointing to a short-term downturn.

Putting It All Together: Key Levels to Watch

This combination of a corrective Elliott Wave pattern, weakening momentum, negative sentiment, and unfavorable July seasonality creates a strong case for a drop or consolidation in the near future. The long-term bullish structure remains intact, but it requires this short-term pullback (Wave (2)) before the next major advance (Wave (3)) can begin.

Therefore, traders should anticipate the price to decline from its current level of approximately 1.1660 towards lower support levels. The recent high of 1.1830 is now expected to act as a formidable resistance level.

Actionable Takeaways & Next Steps

The current analysis suggests patience. While the long-term forecast is bright, the immediate path appears to be lower. Look for signs of the Wave (2) correction completing before positioning for the primary uptrend to resume.

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Disclaimer:

The analysis provided is for educational and informational purposes only. It should not be considered financial advice. Trading in financial markets involves a substantial risk of loss. It is possible to lose some or all of your invested capital. The analysis is based on historical price data and technical indicators. Past performance is not indicative of future results. Market conditions can change rapidly, and any trading strategy can become unprofitable. Any trading decisions you make are solely your responsibility. You should carefully consider your financial situation, risk tolerance, and investment objectives before making any trades. It is essential to conduct your own research and analysis before making any trading decisions. Do not rely solely on the information provided here. There is no guarantee that the trading strategy described will be profitable. You use this information at your own risk. We are not liable for any losses incurred as a result of using this information. In essence: Trading is risky. This analysis is just one perspective. Do your homework, understand the risks, and only trade with money you can afford to lose.