EUR/USD retreated after struggling near 1.1710, triggering a downside correction. On the 4-hour chart, the pair slipped beneath a bullish trend line that had offered support at 1.1655, and moved below the 50% Fibonacci retracement of the rise from the 1.1511 swing low to the 1.1710 high. It also briefly dipped under the 100 simple moving average on the same timeframe, with further weakness pointing to the 76.4% Fibonacci level at 1.1558.
Support is seen around 1.1520, which aligns with the 200 simple moving average (4-hour). A break and close below 1.1520 would leave scope for a move towards 1.1440, with additional downside risk extending to 1.1420. On the upside, resistance sits near 1.1620 and then 1.1660; a close above 1.1660 could shift momentum back towards 1.1710, and further gains would bring 1.1750 into view.
Technical Breakdown And Macro Backdrop
As we transition into September 2026, the EUR/USD pair is showing clear signs of exhaustion after failing to sustain its run near 1.1710. We have observed a decisive break below the bullish trend line at 1.1655, pulling the exchange rate under its 100 simple moving average on the 4-hour chart. This downward correction coincides with recent economic data showing Eurozone core inflation sticking close to 2.2%, which keeps the European Central Bank in a tight spot regarding future rate cuts.
Trading Strategy And Seasonal Considerations
For derivative traders looking to position for further downside, the 1.1558 level is the first line of defense to watch. If the pair drops below the critical 200 simple moving average at 1.1520, we expect a rapid acceleration toward 1.1440 and potentially 1.1420. In this bearish scenario, buying short-term put options with strike prices near 1.1500 offers a low-risk way to capture a potential breakdown.
On the other hand, if support holds, we must monitor key resistance at 1.1620 and 1.1660 for signs of a bullish reversal. A daily close above 1.1660 would invalidate the bearish bias and likely open the door for a push back toward 1.1710. To trade this potential rebound, we favor utilizing bull call spreads, which limit our risk profile while allowing us to participate in a steady move upward.
Historically, September has been a seasonally strong month for the US dollar, with the greenback gaining ground in eight of the last ten years. With the Federal Reserve expected to maintain its current interest rate path, the yield advantage remains a strong tailwind for the dollar. We advise keeping leverage modest over the coming weeks as the market tests these major technical pivot points.
