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Correction Exhaustion at Golden Ratio May Ignite Renewed EURUSD Upside
Forex
Economic
Summary:
This retracement is particularly significant as it has reached the 0.618 Fibonacci level of the pair's recent bullish extension.
Buy
CLOSEDEURUSD
End Time
1.17685
Entry Price
1.19210
TP
1.16700
SL
1.17889 +0.00089 +0.08%
289
Points
Profit
1.16700
SL
1.17974
CLOSING
1.17685
Entry Price
1.19210
TP
Market attention was captured on Wednesday by reports suggesting that Christine Lagarde might be considering a resignation from her post as ECB President prior to the French elections in April 2027. Such a move would strategically allow French President Emmanuel Macron and German Chancellor Friedrich Merz the opportunity to coordinate on a suitable successor before the end of her official mandate in late 2027. However, initial concerns regarding a leadership vacuum were largely mitigated on Thursday. Reports from Reuters indicated that Lagarde has reassured her colleagues of her continued focus on her current role, maintaining that she would provide internal notice well in advance of any formal decision to step down.
Despite the headlines, a transition in leadership is viewed by analysts as unlikely to materially shift the ECB’s current monetary policy trajectory. Market participants broadly anticipate that the central bank will maintain its current interest rate levels through 2026, as Eurozone inflation continues to stabilize near the 2% target. Structurally, the Euro finds support in the European Commission’s advocacy for a Savings and Investment Union and the integration of capital markets. Additionally, the potential reconsideration of Sweden’s status within the European Economic Union provides further long-term fundamental tailwinds for the common currency.
Across the Atlantic, the United States economic machine continues to show surprising vigor. Industrial Production expanded by 0.7% in January, comfortably exceeding the forecasted 0.4% and accelerating from December’s revised 0.2% gain. The manufacturing sector further showcased its resilience as Core Durable Goods Orders (excluding transportation) surged by 0.9%, significantly outpacing the 0.3% projection. While overall Durable Goods fell by 1.4%, the decline was less severe than the anticipated 2% drop. The housing sector added to the positive momentum, with Building Permits rising to 1.448 million and Housing Starts reaching 1.404 million, both of which exceeded consensus estimates.
This robust data set introduces further complexity into the Federal Reserve’s policy deliberations. Internal rhetoric remains starkly polarized: San Francisco Fed President Mary Daly maintains a resolute hawkish posture, arguing that inflationary pressures remain uncomfortably elevated. In contrast, Governor Michael Barr advocates for a more measured, patient approach, suggesting that borrowing costs should remain restrictive until definitive evidence confirms a sustainable move toward the 2% target. Meanwhile, Chicago Fed President Austan Goolsbee acknowledged the progress made on disinflation but warned of a "neutral-loose" policy environment should price levels remain sticky, framing a 3% rate as a potential benchmark for neutral policy.
Technical Analysis
From a technical perspective, EUR/USD has undergone a necessary corrective phase, striking an intraday local low of 1.1742 before recovering toward the 1.1768 level. This retracement is particularly significant as it has reached the 0.618 Fibonacci level of the pair's recent bullish extension. This "Golden Ratio" zone often serves as a primary terminal point for corrections before the dominant trend resumes.
Should the bulls successfully defend this floor, we anticipate a technical pivot toward the local resistance at 1.1921. On the structural front, the 100 and 200-period Moving Averages are situated at 1.1853 and 1.1782, respectively. A swift reclamation of the 200-period MA would provide a strong confirmation that the bullish impulse is being reconstructed.
Our momentum analysis reinforces the potential for a reversal. The RSI has retreated to the 27 level, placing the pair in deeply oversold territory. This suggests that the current bearish pressure is reaching a point of exhaustion. Simultaneously, the MACD histogram is printing bearish bars that currently lack significant volume or "body," fueling the thesis that selling pressure is dissipating. A bullish crossover in the histogram, accompanied by increased volume, would provide the necessary technical validation for the bulls to retake control of the narrative.
Trading Recommendations
Trading direction: Buy
Entry price: 1.1768
Target price: 1.1921
Stop loss: 1.1670
Validity: Mar 04, 2026 15:00:00
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