Germany has agreed to constitutional reforms regarding spending, driven by the need to increase defense expenditures amid a shift away from U.S. military support. This development had an immediate impact on the EURUSD, pushing the pair higher and breaking above a swing area near 1.08725, as well as its 100-hour moving average at 1.08765. The bullish momentum carried the price up to 1.0901, but the rally stalled at that level, indicating resistance.

Since then, EURUSD has retraced lower, testing the same key break levels that initially fueled the upside move. If the price moves back below 1.08725 – 1.08765, the bullish breakout could be at risk. A failure to hold above this area may lead to a further downside rotation, potentially targeting the broken 61.8% retracement level at 1.08174. Adding to the significance of this support zone, the rising 200-hour moving average is also aligning near this level, reinforcing it as a crucial decision point for market participants.

With buyers and sellers now engaged in a battle at the 1.0875 support zone, the next move will be key in determining the pair’s short-term direction. A successful hold above could provide a base for another push higher, while a break below could open the door for further downside toward 1.08174. The video above provides a detailed breakdown of the technical setup and the potential implications for EURUSD.