Bearish EUR/USD: Testing 1.1623-1.1618 Support with 1.1580 Target

The chart tells the story. The EUR/USD is in a confirmed downtrend, and the structure is clear. Price action is capped below the key psychological resistance at 1.1700, which has now served as a consistent ceiling. This failure to break higher reinforces a bearish corrective channel and keeps the momentum on the sellers' side.

The technical shift is now confirmed by the Supertrend indicator, which has turned red. This is the first bearish signal since October, marking a definitive change in trend direction. With the Supertrend now aligned against the bulls, the path of least resistance is down.

The immediate battleground is the support zone between 1.1635 and 1.1580. Within that zone, the critical level to watch is 1.1623-1.1618. A break below this cluster would likely trigger a wave of stop-loss orders and intensify selling pressure. The primary target for a bearish move would then be the next major support at 1.1580. For now, the setup is straightforward: the pair is trading under the 1.1700 ceiling, the trend has flipped bearish, and the next key test is that immediate support.

Technical Drivers: Moving Averages and Momentum Fade

The bearish bias is being reinforced by key technical tools. The simple moving averages are now acting as dynamic resistance, weighing on price action and maintaining consistent downside pressure. This is the first major technical hurdle the bulls have failed to clear, capping rallies and reinforcing the descending channel.

More telling is the signal from the Relative Strength Index. The RSI is showing emerging negative signals, which point directly to fading bullish momentum. When momentum starts to fade on a key indicator like the RSI, it often precedes a more sustained move lower. This technical confirmation aligns with the price action, suggesting the recent corrective bounce has lost its steam.

The immediate target for sellers is clear. The primary downside level is 1.1625. A decisive break below this support would likely intensify selling pressure, as it would invalidate the current corrective structure and open the path toward the next major support at 1.1585. For now, the setup is one of resistance and fading momentum, with the 1.1625 level serving as the critical line in the sand.

Trading Implications: Entry, Stop, and Target Levels

The setup is clear. The bearish structure is intact, with price capped below 1.1700. The key is to trade the breakdowns and reversals within this framework. Here's the actionable plan.

First, the primary bearish target is 1.1585. The immediate support cluster at 1.1623-1.1618 is the critical line. A decisive break below that zone would likely trigger a wave of stop-loss orders and accelerate the move toward 1.1585. If that level fails, the next major support is 1.1545. That's the full downside path for a sustained bearish move.

For short entries, the signal is a bearish reversal pattern at key resistance levels. Watch for a classic price action reversal-like a pin bar or engulfing candle-on the hourly chart at $1.1654, $1.1676, or $1.1701. Enter short immediately on that rejection. Place your stop-loss just 1 pip above the local swing high to manage risk tightly. Once the trade moves 20 pips in your favor, move the stop to break even. Then, take half the position off at that 20-pip profit and let the rest ride toward the next target.

The primary risk to this thesis is a sustained break above the 1.1700 resistance. A decisive close above that level would invalidate the short-term bearish structure and signal a potential recovery. In that case, the next upside target would be the 1.1740 area. For now, the path of least resistance is down, but traders must respect the 1.1700 ceiling.

Bottom line: Fade rallies at the 1.1654-1.1701 zone with a tight stop above the swing high. Target 1.1585, with 1.1545 as the next leg down. The 1.1700 level is the key that unlocks the entire bearish scenario.

Catalysts and Risks: Data and Sentiment

The immediate catalyst is here. Today's high-impact U.S. data releases are the key event that could trigger the next major move. Traders are watching the Retail Sales and Producer Price Index (PPI) figures for clues on inflation and consumer strength. A stronger-than-expected print could reinforce the dollar's bullish momentum, accelerating the move toward 1.1585. Conversely, softer data might provide a temporary reprieve for the euro, testing the resolve of sellers.

The primary risk to the bearish thesis is a sustained break above the 1.1700 resistance level. As noted, that psychological ceiling has now served as a consistent cap. A decisive close above it would invalidate the current corrective channel and signal a shift in momentum. In that scenario, the next upside target would be 1.1740, and the entire short-term bearish setup would be in question.

Sentiment around the Federal Reserve also adds a layer of short-term volatility. The market is reacting to the ongoing legal situation involving Fed Chair Jerome Powell, which has introduced a new element of uncertainty. While the core technical trend is bearish, this sentiment can amplify near-term swings. Traders must watch for any dovish comments from Fed officials that could weaken the dollar, or hawkish signals that would fuel the current strength. The data today is the immediate trigger, but the Fed narrative remains a wildcard.