The EUR/USD currency pair has formed a bearish technical setup on the daily chart, currently trading around the 1.10770 level. Price action is compressing between the 200-day simple moving average at 1.10890 and the 50-day SMA at 1.10550, suggesting building downward momentum.
Based on the current technical picture, I anticipate two likely scenarios for EUR/USD over the coming sessions:
Scenario 1: Price may briefly push higher towards the 1.11021 resistance area, which aligns with the 38.2% Fibonacci retracement of the prior downtrend. If bulls can propel the pair above this level, we could see an extension up to test the 1.11186 and 1.11290 areas. Stronger bullish momentum could open the door for a rally towards 1.11404, 1.11552 and 1.11959.
Scenario 2: Alternatively, failure to overcome 1.11021 could spark a sell-off back towards the 1.10581 support zone. Sustained weakness below here would turn focus to the 1.10514, 1.10443 and 1.10365 support levels. A major downside break of 1.10365 may accelerate declines toward 1.10289 and 1.10211, representing the 50% and 61.8% Fib retracement levels respectively.
The daily RSI is currently overbought, hinting that a minor pullback or consolidation may occur in the very near-term. However, the broader technical structure remains bearish below 1.11290 resistance. I will look for selling opportunities on rallies, targeting support levels if prices rollover. The pair may trade choppily between 1.10211 and 1.11552 before establishing a clear directional bias.