EUR/USD in Correction Mode: Potential Pullback Ahead.

The EUR/USD currency pair has witnessed a decline in its value and subsequently bounced back from the 1.0975 region. Over the past week, the EUR/USD has been retreating from its recent highs in the proximity of 1.1100. This drop can be attributed to the correction in the upside movement of the dollar.

As of now, the price movement of the EUR/USD is expected to continue to follow the dynamics of the dollar closely. It is also expected to be influenced by the diverging intentions of the Fed and ECB banks regarding potential interest rate changes.

Despite the hawkish stance of the ECB, which supports further rate hikes, there seems to be a loss of momentum in economic fundamentals in the region, which contrasts this view.

Our analysis suggests that the EUR/USD might experience a pullback in the 50%-61.8% Fibonacci area before setting up for a new long position. However, if the price falls below the 78.6% Fibonacci level, it could indicate a short entry opportunity.