On 2 July, on the EUR/USD chart, we noted that the rally—during which the pair had gained more than 6% since mid-May—was under threat, citing several technical signals, including:
→ proximity of the price to the upper boundary of the ascending channel;
→ overbought conditions on the RSI indicator;
→ nearby resistance from the Fibonacci Extension levels, around 1.18500.

Trading at the start of the week points to renewed US dollar strength. This became particularly evident with the opening of the European session, which triggered a decline in EUR/USD to the 1.17500 area.

It is reasonable to assume that the dollar’s strength against the euro is linked to early-week positioning by traders, who are anticipating news regarding US trade agreements.

According to Reuters, the United States is close to finalising several trade deals in the coming days and is expected to notify 12 other countries today about higher tariffs.

EUR/USD Technical Chart Analysis

The ascending channel established last week remains in play, with the following developments:
→ a dashed midline within the upper half of the channel has been breached by bearish pressure (as indicated by the arrow);
→ a series of lower highs in recent sessions suggests the formation of a downward trajectory, within which the price could move towards the channel median—or potentially test its lower boundary.

P.S. In the longer term, analysts at Morgan Stanley maintain a bullish outlook, forecasting that EUR/USD could rise to 1.2700 by the end of 2027.

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