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Euro Technical Forecast: EUR/USD Revisits 1.0500

Article By: ,  Sr. Strategist
February 21, 2025 1:39 PM

Euro, EUR/USD Talking Points:

  • EUR/USD battled the 1.0500 psychological level as the pair opened on Monday with resistance at the level and then found resistance there again on Thursday.
  • The tariff topic continues to dominate and the fear of auto tariffs from the U.S. has helped to keep support in-play for USD at the 106.61 level and that’s equated to resistance in EUR/USD around 1.0500.
  • The big takeaway right now for EUR/USD is deductive, where sellers have continually had an open door to take the pair down to fresh lows in February but have continually failed to do so. Bulls haven’t exactly taken away with matters as resistance holds around 1.0500, but that lack of bearish drive could soon lead to breakout potential in the pair.
  • I’ll be looking into both EUR/USD and the U.S. Dollar in-depth in the Tuesday webinar, and you’re welcome to join. Click here for registration information.

 


 

The 1.0500 level has been a tricky spot so far for EUR/USD traders in 2025. The pair fell from that price on December 18th, the day of the last FOMC rate cut, and it was back in-play in late January as it helped to form an evening star pattern. That evening star held the highs until last Friday, when 1.0500 was back in the picture as resistance.

Between those two occurrences was a sell-off in the pair that was largely pushed by the threat of tariffs. Trump had announced in early-February that tariffs would be coming to Europe ‘pretty soon.’ And in the first week of the month he warned of reciprocal tariffs, which was largely implying a focus on European products. That threat of reciprocal tariffs helped EUR/USD to hold resistance at a confluent spot of Fibonacci levels, but the pullback from that resistance showed another higher-low, with buyers taking over a week later when details of the reciprocal tariffs actually hit the headlines.

While reciprocal tariffs could have a large impact on Europe, the fact that they were announced for an April 1st implementation date led many to think that it’s more of a negotiation tactic than an actual threat. The pair broke-out above the 1.0400 resistance as reciprocal tariffs were announced and that’s what helped to drive that 1.0500 test; the pullback of which held support at prior resistance on Wednesday of this week at the same 1.0400 handle.

I had talked about this setup in the Tuesday webinar and as I shared then, the 1.0400 area has held a higher-low with price pushing right back up to the 1.0500 handle. 

 

EUR/USD Daily Price Chart

 

 

From the weekly chart we can see the importance of that 1.0500 level, which has held the highs in the pair since mid-December, the week of the FOMC rate decision. But more recently it’s the higher-lows that have printed, with prices holding above the 1.0200 inflection in January, even as tariff threats were getting priced-in earlier in February. This retains breakout potential in the pair and if bulls can grind above the 1.0500 handle, the next major level is the 1.0611 Fibonacci level that had set the highs in early-December, on the day of the NFP release.

 

EUR/USD Weekly Price Chart

 Chart prepared by James Stanley; data derived from Tradingview

 

--- written by James Stanley, Senior Strategist

 

Euro, EUR/USD Talking Points:

  • EUR/USD battled the 1.0500 psychological level as the pair opened on Monday with resistance at the level and then found resistance there again on Thursday.
  • The tariff topic continues to dominate and the fear of auto tariffs from the U.S. has helped to keep support in-play for USD at the 106.61 level and that’s equated to resistance in EUR/USD around 1.0500.
  • The big takeaway right now for EUR/USD is deductive, where sellers have continually had an open door to take the pair down to fresh lows in February but have continually failed to do so. Bulls haven’t exactly taken away with matters as resistance holds around 1.0500, but that lack of bearish drive could soon lead to breakout potential in the pair.
  • I’ll be looking into both EUR/USD and the U.S. Dollar in-depth in the Tuesday webinar, and you’re welcome to join. Click here for registration information.

The 1.0500 level has been a tricky spot so far for EUR/USD traders in 2025. The pair fell from that price on December 18th, the day of the last FOMC rate cut, and it was back in-play in late January as it helped to form an evening star pattern. That evening star held the highs until last Friday, when 1.0500 was back in the picture as resistance.

Between those two occurrences was a sell-off in the pair that was largely pushed by the threat of tariffs. Trump had announced in early-February that tariffs would be coming to Europe ‘pretty soon.’ And in the first week of the month he warned of reciprocal tariffs, which was largely implying a focus on European products. That threat of reciprocal tariffs helped EUR/USD to hold resistance at a confluent spot of Fibonacci levels, but the pullback from that resistance showed another higher-low, with buyers taking over a week later when details of the reciprocal tariffs actually hit the headlines.

While reciprocal tariffs could have a large impact on Europe, the fact that they were announced for an April 1st implementation date led many to think that it’s more of a negotiation tactic than an actual threat. The pair broke-out above the 1.0400 resistance as reciprocal tariffs were announced and that’s what helped to drive that 1.0500 test; the pullback of which held support at prior resistance on Wednesday of this week at the same 1.0400 handle.

I had talked about this setup in the Tuesday webinar and as I shared then, the 1.0400 area has held a higher-low with price pushing right back up to the 1.0500 handle. 

 

EUR/USD Daily Price Chart

 

 

From the weekly chart we can see the importance of that 1.0500 level, which has held the highs in the pair since mid-December, the week of the FOMC rate decision. But more recently it’s the higher-lows that have printed, with prices holding above the 1.0200 inflection in January, even as tariff threats were getting priced-in earlier in February. This retains breakout potential in the pair and if bulls can grind above the 1.0500 handle, the next major level is the 1.0611 Fibonacci level that had set the highs in early-December, on the day of the NFP release.

 

EUR/USD Weekly Price Chart

 Chart prepared by James Stanley; data derived from Tradingview

 

--- written by James Stanley, Senior Strategist

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