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EUR/USD Supported by Rising Investor Optimism in Germany
Traders' Opinions
Summary:
EUR/USD traded above 1.1600 on Tuesday after stronger-than-expected German and Eurozone sentiment data improved confidence in the region's outlook. However, gains remained limited ahead of the Federal Reserve's policy decision and ongoing developments surrounding a potential US-Iran peace agreement.
Buy
TradingEURUSD
EXP
1.16100
Entry Price
1.16700
TP
1.15600
SL
1.16079 +0.00191 +0.16%
0
Point
Flat
1.15600
SL
CLOSING
1.16100
Entry Price
1.16700
TP
The Euro strengthened against the US Dollar on Tuesday, with EUR/USD climbing back above 1.1600 as investor sentiment across Germany and the broader Eurozone improved more than expected.
Germany's ZEW Economic Sentiment Index surged to 10.5 in June from -10.2 in May, beating forecasts and marking its first positive reading since February. The Eurozone's equivalent gauge also improved sharply to 9.5 from -9.1, signaling growing optimism among institutional investors about the region's economic prospects.
Despite the upbeat sentiment data, concerns about the current state of Germany's economy persisted. The ZEW measure of current conditions fell further to -81.0 from -77.8, highlighting continued weakness in Europe's largest economy and limiting the Euro's upside momentum.
Investors also remained cautious ahead of Wednesday's Federal Reserve policy decision. While the Fed is widely expected to keep interest rates unchanged, markets are focused on Chairman Kevin Warsh's comments and updated economic projections for clues on the future direction of US monetary policy.
In my view, the rebound in investor confidence is an encouraging sign for the Euro, but sustained gains will likely require stronger economic data. For now, EUR/USD remains supported by improving sentiment, although Fed guidance could ultimately determine the pair's next major move.
Technical Analysis
From a technical standpoint, EUR/USD appears to be transitioning back into a bullish structure after completing a well-defined double-bottom reversal pattern near the 1.1510 support zone on the 1-hour chart. The pair successfully defended this key demand area on two separate occasions before breaking above the neckline resistance around 1.1570–1.1580, confirming the bullish reversal and signaling that buyers have regained near-term control.
The recent advance has carried prices back above the psychologically important 1.1600 level, a zone that previously acted as resistance and is now attempting to transition into support. The ability of EUR/USD to reclaim and hold above this level suggests that bullish momentum remains intact despite intermittent profit-taking. Price action over the last several sessions has produced a sequence of higher lows and higher highs, reinforcing the constructive outlook.
A notable feature of the chart is the sharp rejection from the double-bottom base, which triggered an impulsive rally toward the current 1.1610 region. Such moves often indicate strong underlying demand and increase the probability of a continuation toward higher resistance levels. As long as the pair remains above the 1.1590–1.1600 support area, the path of least resistance appears tilted to the upside.
Looking ahead, the next major resistance zone is located near 1.1660–1.1670, where previous swing highs and a significant supply area converge. A decisive break and sustained close above this barrier would confirm a broader bullish continuation and expose the 1.1700 psychological level, which could attract fresh momentum buying and trend-following flows.
On the downside, failure to maintain support above 1.1600 could trigger a corrective pullback toward the breakout area around 1.1570–1.1580. This region represents the neckline of the completed double-bottom formation and should provide a strong layer of support. A sustained move below that zone would weaken the bullish setup and expose the key 1.1510–1.1520 support area once again. A break beneath those lows would invalidate the reversal pattern and signal a return to broader bearish pressure.
Although momentum indicators are not displayed on the chart, the strength of the rebound from the double-bottom structure suggests improving bullish momentum. The recent breakout above resistance, combined with the successful retest of higher support levels, points to continued upside potential provided buyers can maintain control above the 1.1600 threshold.
TRADE RECOMMENDATION
BUY EUR/USD
ENTRY PRICE: 1.1610
STOP LOSS: 1.1560
TAKE PROFIT: 1.1670
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