EURUSD: Consolidation Phase or Prelude to a New Trend? A Technical, Macro & Seasonal Analysis

Introduction

EURUSD, the most traded currency pair globally, continues to attract the attention of investors worldwide. In an extremely dynamic macroeconomic context — characterized by interest rate differentials between the Federal Reserve and the ECB, diverging inflation trends, and different monetary policy approaches — the pair experienced a significant downtrend throughout 2023. However, since the start of 2024, the market has been showing signs of consolidation within a well-defined range.

Technical Context

Since the beginning of the year, EURUSD has been trading sideways, fluctuating within a range between 1.0700 and 1.0250, with price action heavily influenced by key value areas.

Current value area: between 1.0500 and 1.0360
High Volume Node (HVN): central area at 1.0445
Lower value area: extending down to 1.0250, with HVN at 1.0330
Upper value area: extending up to 1.0590, with HVN at 1.0540

Recent Price Action

In the past few days, the market attempted an upward breakout into the upper value area, but it faced significant resistance at the HVN at 1.0540. This triggered a sharp reversal, pulling prices back into the current value area. Moreover, the strong bearish impulse broke through the POC at 1.0445, opening the door for a possible test of the Low Volume Node (LVN) at 1.0360.

Key Supports and Resistances

Minor supports:
1.0390-1.0388
1.0384-1.0382

Key support:
1.0360 – a break below this level would officially shift the pair into the lower value area, with potential targets at 1.0330 and eventually 1.0250.

Resistances:
Yesterday’s POC at 1.0422
The 1.0475-1.0505 zone, critical for any sustained upside attempt
A break above 1.0525-1.0540 would open the door toward 1.0577-1.0582

Macro Factors & The Trump Effect

Technical analysis is further reinforced by historical comparisons of the Dollar Index during Trump’s first presidency versus the current post-election scenario. Historically, the former president openly favored a weaker dollar, which effectively led to a sharp depreciation of the greenback during his term.

As shown in the chart below, the pattern of dollar weakness seen between 2016 and 2017 appears to be emerging again in the current cycle, potentially paving the way for further EURUSD upside.

Seasonality as Additional Confirmation

Both technical and macro views align with seasonal patterns. Looking at the average 30-year seasonality for EURUSD, the pair tends to find a seasonal low between February and March, followed by a bullish phase extending into late April or early May.

Conclusion

EURUSD is at a critical juncture, where price action reflects a fragile balance between technical and macroeconomic drivers. Seasonal tendencies and the Trump historical parallel offer additional context, hinting that the upside potential may outweigh downside risks if the dollar resumes its weakening trend.

However, from a technical standpoint, only a sustained break above 1.0505 and then 1.0540 would confirm a bullish outlook. On the other hand, a clean break below 1.0360 would likely open the door for further declines toward 1.0330 and possibly 1.0250.

In summary: bulls and bears are in a heated battle, and the coming sessions will be crucial in determining the pair’s medium-term directional bias.