EUR/USD Knocks on 1.16: Breakout or Fakeout?
EUR/USD touched 1.1614 this week — the highest since early May — before pulling back to 1.1574. The pair has now rallied 3 cents from the June low of 1.1325, and it’s approaching the level that separates “correction” from “trend change”: 1.1620.
Why 1.1620 matters
It’s the convergence zone of three technical markers: the May breakdown level, the 61.8% retracement of the April–June decline, and the downtrend line from the spring highs. Confluence zones like this one act as gates — pairs either pass through them with authority or get rejected hard. There’s rarely a middle outcome.
The fundamentals are honestly mixed. The euro’s rally has been driven less by European strength than by dollar fatigue after the July yen shock. That’s a weaker foundation than genuine ECB repricing, and it makes the breakout attempt more vulnerable to failure.
The evidence to watch
First, the close. Intraday pokes above resistance mean nothing; a weekly close above 1.1620 means everything. Second, the crosses: if EUR/JPY can hold 183.7 while EUR/USD breaks out, the move has real sponsorship. Third, the data: eurozone inflation figures next week could either validate the move or expose it as dollar-driven froth.
My stance: neutral-to-long above 1.1500, aggressive only on the weekly close above 1.1620. Below 1.1513 — last week’s low — this was all just a correction, and the downtrend resumes with 1.1400 as the next target.
Disclaimer: This is market commentary, not investment advice. FX trading carries substantial risk of loss.
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