EURUSD is nearing a critical resistance level as the US Dollar experiences softness, despite no apparent catalyst. A congested short dollar trade could provide potential opportunities, with expectations of rising Treasury yields in the coming weeks.

Doubts have emerged about the likelihood of more than one rate cut this year. For the market to adjust its pricing, stronger economic data or more assertive Federal Reserve remarks may be necessary.

Federal Reserve Waller Speech

Federal Reserve’s Waller is scheduled to speak soon, with the possibility of delivering decisive comments that could impact the US Dollar. However, he may choose not to address monetary policy at the event.

On the 4-hour chart, EURUSD is nearing a resistance zone around 1.1275, intersecting with both old support and a downward trendline. Sellers may seek a drop towards the 1.10 level if the price reaches this zone, positioning themselves with a controlled risk above the trendline. Conversely, buyers will aim for a breakout, targeting the 1.15 level if the bearish outlook is invalidated.

What we’re observing right now is a market that’s hesitating slightly, trying to work out whether it really wants to buy more EURUSD just as the pair approaches 1.1275—a price that’s not just visually important but technically loaded with context. There’s history here; it marks a former base turned ceiling, and we’re watching to see how participants act as price draws near. It’s not simply about chart patterns or lines; it’s about whether anyone out there believes that the dollar has more room to fall or whether we’ve all become a bit too confident in selling it.

The recent softness in the greenback isn’t backed by any major shift in data or policy announcements, which has made some traders cautious. Sometimes, too many people leaning the same way in the market can cause reversals—not because of some fresh economic narrative but simply because the trade gets too crowded. That might be what we’re seeing now. We’ve noticed that positioning lately has been skewed against the dollar, yet yields are showing signs of creeping up. That leaves room for a squeeze in either direction.

Current Market Structure

Keep in mind, rates markets have cooled their expectations. The earlier consensus for rate cuts has faded, and now most forecasts only point to one move, if that. The reasoning here is matter-of-fact: growth and jobs aren’t showing enough weakness to justify aggressive loosening, and inflation is proving to be sticky. This recalibration has already shifted options pricing and elevated forward guidance readings. To shift things further, we would likely need tough economic prints that surprise to the downside or, alternatively, a clear verbal shift by policymakers.

Waller’s upcoming remarks could feed into that narrative pivot, though it’s far from guaranteed that he’ll speak on monetary policy at all. We are quite interested to see what tone he strikes; if he avoids policy, the market may remain in a holding pattern until more data arrives. But if he does comment on policy trajectories, especially with a firm lean towards higher-for-longer rates, it could cause a short-term pop in dollar demand—particularly if traders have leaned too far in expecting dovishness.

From a technical perspective, we’re approaching a decisive area. The 1.1275 mark acts as a meeting point between a minor trendline and a retracement level from previous selling. If momentum can’t force a clean break, it presents a rather tidy risk area for directional plays. For those looking to fade strength, placing protective levels just above the upper boundary of this resistance range enables more efficient setups, especially given the degree to which this level has already been tested and respected in past price movements.

Should momentum override caution, and we press through this zone cleanly, 1.15 comes into play again. That level hasn’t been durable in the past year, but it remains a psychological magnet simply because of what it implies: broader weakness in US rate narratives and larger inflows into euro-based assets.

For now, the structure remains tight, and adjustments are reactive more than proactive. We are treating the current moves more as noise unless confirmed by either rate repricing in the market or a concrete break of layered technical levels.

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