EUR/USD faces challenges: Can it break to new gains?

Key highlights

• EUR/USD is facing hurdles near the 1.1120 and 1.1140 levels.
• A major contracting triangle is forming with support at 1.1060 on the 4-hour chart.

EUR/USD technical analysis

Looking at the 4-hour chart, the pair failed to clear the 61.8% Fib retracement level of the downward move from the 1.1201 swing high to the 1.1026 low. There was a sharp bearish reaction, and the pair trimmed some gains.

There was a drop below the 1.1100 and the 100 simple moving average (red, 4-hour), but it stayed above the 200 simple moving average (green, 4-hour). On the downside, immediate support sits near the 1.1050 level.

There is also a major contracting triangle forming with support at 1.1060 on the same chart. The next key support sits near the 1.1020 level.

The main support is now forming near 1.0980. A downside break below the 1.0980 level could set the pace for a larger decline. The next major support is near the 1.0920 level.

On the upside, the pair could face resistance near the 1.1120 level. The next key resistance sits near the 1.1140 level and the triangle’s upper trend line. A clear move above the 1.1140 level could set the pace for a move toward the 1.1200 zone. Any more gains might call for a test of the 1.1250 zone.