The euro has increased by half a cent today, reaching its highest levels since Monday. It experienced a rise nearly neutralising its position over the course of the week.

Earlier in the week, the US dollar was sought after as a safe-haven due to concerns about conflict in the Middle East. However, the dollar is now losing some of those gains, benefiting the euro.

Inverted Head And Shoulders Pattern

On the chart, the euro has formed an inverted head-and-shoulders pattern. This pattern aims at retesting recent highs around 1.1615.

This latest movement has given the euro much firmer footing than it held at the start of the week, when risk sentiment took a downturn and safe assets such as the dollar came into favour. The pattern we now see—an inverted head-and-shoulders—shouldn’t be overlooked, as it often precedes renewed strength. While it doesn’t always play out to the textbook, its presence here, combined with momentum building towards 1.1615, suggests that market participants are beginning to position for the prospect of further upside.

We noticed that as the dollar gave up some of its recent haven-driven strength, it wasn’t just a matter of geopolitical anxiety fading into the background. Rates markets have contributed to this shift too, with yields softening in parts of the Treasury curve. This takes some pressure off dollar-based assets, which struggled to maintain their attraction without yield advantage as supportive as earlier in the week.

Assuming no fresh developments inject fresh uncertainty into markets, this pullback in the dollar could provide space for the euro to stabilise further, especially if risk appetite holds. Economic prints next week could easily turn sentiment again, but for now, technicals are not positioned against euro strength.

Monitoring Market Positioning

From our point of view, tracking positioning is especially important now. Open interest has grown near key resistance zones, often a sign that short-term players are trying to capture breakout momentum. Against that, spreads have narrowed slightly, which implies some caution is still being taken. That kind of divergence tends to create a tug between conviction trades and those hedging against the sudden shifts we sometimes see in response to newsflow.

As traders, it makes sense not just to watch the key levels, but to also measure execution closely. Moves towards 1.1615 will likely invite heavier flows. If that level begins to act more as magnet than ceiling, then strategies that favour continuity in trend may have the edge near-term.

We’re also mindful of speculative flows thinning into weekends. This often brings reduced depth, allowing sharp moves on modest volume. That’s something that can amplify what might otherwise look like routine retracement or push. Stop placements become even more relevant here, not as blunt instruments but as strategic tools.

In short, recent gains are not happening in a vacuum. They come after compression earlier, and now, with ranges opening up again, it makes sense to act with intent, not react to noise.

Create your live VT Markets account and start trading now.