EUR/USD tested lows at 1.0140 before rebounding, as reported by FX analysts. The currency has stabilised above the 50-day moving average, suggesting regained upward momentum.

The near-term support is identified around 1.0400 to 1.0385. A defence of this level may lead to an upward bounce towards projected levels of 1.0580 and the December high of 1.0630, with potential for a larger upward movement if that barrier is surpassed.

This recent shift in direction indicates a possible recovery phase, which we can see reflected in the price action. The fact that it held above the 50-day average is a positive sign, as it suggests buyers are willing to step in at these lower levels. In technical terms, this kind of support helps reaffirm confidence, reducing immediate downside risks.

If the 1.0400 to 1.0385 range is successfully maintained, it could act as a platform for a push higher. A break above the 1.0580 region would reinforce that strength, possibly setting the stage for a test of December’s peak at 1.0630. Should that level give way, stronger bullish momentum may follow, creating space for a broader advance. Traders should remain attentive to this range, as any failure to hold could shift attention back towards recent lows.

Simultaneously, market sentiment is also being influenced by developments surrounding rate expectations. Carol, who has been analysing central bank policy adjustments, notes that any further divergence between the Federal Reserve and the European Central Bank on rate outlooks could play a part in shaping price action. While inflation-related announcements remain in focus, reactions to those numbers could dictate near-term trends.

Tim, looking at broader macroeconomic conditions, highlights how external factors, including geopolitical influences, could also come into play. If uncertainty increases, there might be added volatility in the pair. We should also watch for bond market movements, as any reaction there could reflect shifting attitudes towards risk exposure.

For traders using derivatives, especially those employing options or futures contracts, staying alert to breakout levels seems prudent. Price action around these support and resistance levels may provide key directional signals, helping refine short-term positioning. If the current range holds, managing exposure accordingly might be worth considering, particularly with event-driven catalysts on the horizon.