The EUR/USD is at a major tipping point, and traders are holding their breath. After breaking through a critical resistance level that held it down for years, the pair has climbed to around 1.1755. But just as the bulls are celebrating, warning signs are flashing that the rally might be running out of steam.

So, is this the start of a new long-term uptrend, or is it a trap before the next leg down? Let’s break it down.

The Euro has finally broken out of a downward channel that’s been in place for over a decade. This is a huge deal and could signal a major long-term reversal. The next major targets could be as high as 1.2000–1.2400.

The Current Vibe (Short-Term): Bearish/Neutral. In the immediate future, things look shaky. Momentum is fading, and historical trends for October and November aren’t on the Euro’s side. We could be in for a pullback before the rally continues. The zone between 1.1400 and 1.1800 is where the fight is happening. A decisive move out of this range will likely tell us where we’re headed next.

The Case for a Pullback

Those who are cautious point to some serious red flags. They believe the recent surge is just a temporary bounce in a larger downtrend.

The price was rejected at a major long-term trendline, and recent price action shows sellers are stepping in. Even though the price has been inching higher, key momentum indicators (like the z-score) are lagging behind. This “divergence” is a classic sign that a rally is losing its strength. October and November are historically weak months for the Euro, adding another headwind.

The Case for a Continued Rally

The bulls argue that we need to zoom out and respect the massive breakout. They see the current pause as nothing more than the market catching its breath before the next big move up.

You can’t ignore it. The pair has shattered a bearish channel that started way back in 2008. What was once a ceiling is now becoming a floor. Technical indicators like the ADX suggest the market is simply pausing, not reversing. According to Elliott Wave theory, the pair has finished a major correction and is now in “Wave III”—which is typically the strongest and most powerful phase of a trend. The next major targets are up at 1.2050–1.2400.

So, What’s the Game Plan?

With strong arguments on both sides, the market is stuck in the middle. The long-term picture looks bullish, but the short-term signals scream caution. Here’s a simple framework for navigating this setup:

• Bears Take Control If: We see sustained daily closes below 1.1620.
• Bulls Confirm Their Power If: We see a weekly close above the 1.1800–1.1919 zone.
• While We Wait: As long as the price chops around between 1.1650 and 1.1810, it might be best to trade smaller or wait for a clearer signal.

Patience is a trader’s best friend right now. The EUR/USD has made a historically significant bullish move, but the immediate path is foggy. The smart play is to wait for the market to prove its next direction with a decisive break of the key levels mentioned above.

Have questions? Contact our research team at info@forexaccountmanagers.com or +1 (604) 991-6582

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.