Market Overview
The EUR/USD pair has experienced significant volatility as market participants price in a potential rate cut by the European Central Bank (ECB) at the upcoming monetary policy meeting. Concurrently, US economic resilience continues to support the Dollar Index (DXY), keeping the Euro under pressure.
Technical Analysis & Smart Money Levels
From an SMC perspective, we observed a clean 4-hour Liquidity Sweep of the previous week's highs at 1.0890. Following this sweep, the market experienced a sharp displacement down, leaving behind a 4-hour Fair Value Gap (FVG) between 1.0850 and 1.0870.
Our primary trade setup for this week relies on a return to this FVG to search for short entries targeting the sell-side liquidity resting below the swing low of 1.0780.
Key Targets
- Resistance / Premium Array: 1.0865 (50% equilibrium of the dealing range)
- Support / Target: 1.0780 (Major sell-side liquidity pool)
- Invalidation: 1.0920 (Above the swing high sweep)
Macro Fundamentals
Economic indicators point towards decelerating Eurozone inflation, providing the ECB with the necessary data to justify easing. In the US, retail sales and core inflation metrics remain steady. Traders should exercise caution during central bank announcements and avoid high-leverage positions.