EUR/USD Price Forecast: Rebound Remains Fragile Below Key Moving Averages

EUR/USD's modest rebound on Friday appears to lack momentum, with the pair hovering below key technical moving averages, underscoring fragile bullish confidence. Although the dollar has temporarily stabilized after a sharp decline in the previous session, offering some respite for the euro, any upside attempts are met with resistance. At the time of writing, the pair is trading at 1.1232, below the earlier intraday high of 1.1269, indicating heavy selling pressure above.

**Key Moving Averages Form Strong Resistance**

From a technical perspective, the downside risk for EUR/USD remains unresolved. Market reports indicate that the pair is currently trading below the critical 100-day exponential moving average (EMA), and as long as it fails to reclaim the 1.1620 level, any rebound is likely to continue attracting sellers. The Relative Strength Index (RSI) sits near 37.55, below the midline, further confirming that downside momentum dominates. This suggests that any rally lacking volume support is more likely to be viewed as a technical correction rather than a trend reversal.

**Dollar Stability Caps EUR/USD Upside**

The dollar index's trajectory remains the core variable driving EUR/USD. On Thursday, the dollar came under significant pressure due to improved market risk sentiment, indirectly boosting the euro. However, as dollar bearish momentum stabilizes after being released, catalysts for further euro gains are temporarily absent. Market analysts believe that, in the absence of major positive developments in the eurozone, the height of any rebound will be heavily constrained by the dollar's overall strength. If upcoming U.S. economic data or Federal Reserve officials' remarks rekindle dollar buying, EUR/USD could quickly give back this week's modest gains.

**Weekly Gains Mask Medium-Term Concerns**

Although EUR/USD is poised to end a five-week losing streak and post its first weekly gain in six weeks, this is more attributable to short covering than active buying. According to market observations, as long as the pair remains below key moving averages, the path of least resistance is still downward. A decisive break below the 100-day EMA could trigger a fresh wave of selling and retest previous support zones at lower levels.