Euro Short-term Outlook: EUR/USD Reversal Halted at Pivotal Support
By Michael Boutros, Sr. Technical Strategist
Date: 06/02/2026
Market Overview
The EUR/USD currency pair has recently experienced a decline of over 2.6% from its January highs. This pullback has slowed as the price approaches a significant support zone, which is crucial for determining the future direction of the pair. The market's reaction to this support level will be pivotal in deciding whether the current pullback will deepen or stabilize.
Technical Analysis
The EUR/USD is currently trading just above a critical support zone after a sharp decline. This area has historically acted as a reference point within the broader uptrend. A decisive break below this support could indicate that the correction has further to run, while holding above it may suggest a potential stabilization and reassessment of the recent decline.
Key resistance levels are identified at 1.1866/75, 1.1919, and 1.2020/42, while support levels are at 1.1746/71, 1.1646, and 1.1590. The upcoming US Non-Farm Payrolls and CPI data releases are expected to add volatility to the market.
Recent Price Action
In the previous month, the EUR/USD was noted to be in a near-term downtrend. A significant support level was identified at 1.1590/98, which was defined by the December low and other technical indicators. Following a break lower, the price rebounded sharply, indicating a potential reversal.
On January 19, an outside-day reversal off support led to a rally of over 4.3%, but the price has since declined again, rebounding off the key support zone at 1.1746/71. The focus is now on how the market will react in the coming days, with bears remaining vulnerable while the price stays above this support level.
Outlook and Key Levels
The current outlook for the Euro suggests that it is trading just above a multi-week uptrend support. A reaction off this zone is anticipated early in the month. If the price rallies, it would need to be limited to 1.1919 to maintain the bearish outlook. Conversely, a daily close below 1.1746 would indicate a potential for further declines.
Traders are advised to remain cautious ahead of the upcoming economic data releases, as these could significantly impact market direction. Monitoring weekly closes will provide further guidance on the EUR/USD's trajectory.