EUR/USD weekly: the battle for 1.1150 and 1.1250

Structure first, direction second

At the New York close on 14 October, EUR/USD settled at 1.1151, having failed to extend the previous week's rebound high. The driver of this pullback did not come from the euro area itself but from a repricing of the dollar leg: US September CPI rose 3.7% year on year and 0.6% month on month, both above expectations, pushing the market's pricing of one further Fed hike this year above 85%. The dollar index closed at 102.53, an 18-month high.

Assessing whether the weekly structure is intact requires only three observations: did the pullback hold the area where the previous advance began, did volatility contract during the pullback, and can a bounce reclaim the prior high? If all three hold, the structure continues. If two break down, the weight assigned to trend continuation should be reduced.

Why 1.1150 is the level that matters

The 1.1150 area corresponds to two references at once: the launch zone of the late-September advance and the upper edge of August's dense trading range. A daily close above it shows buyers are still willing to absorb supply on pullbacks. Two consecutive closes below it would break the weekly uptrend and shift the next reference down to the 1.1060 area.

It is worth stressing that the value of such a level lies in its role as an invalidation condition, not as a guaranteed bounce. Treating 1.1150 as an observation point forces you to decide in advance what you will do if it holds and what you will do if it fails.

Confirmation to the upside

Above the market, watch 1.1250. Only a break that then holds, with the subsequent retracement no longer trading back inside the range, would suggest the consolidation is over. A single intraday spike is not a valid breakout — on 15 October the dollar index surged after the CPI release and then gave back most of the gain into the close, a textbook data-driven spike.

An executable confirmation sequence is: wait for a daily close beyond the level, wait for a retest that holds, and only then consider an entry. That is slower than chasing intraday, but it caps the cost of being wrong to a very narrow band.

Invalidation to the downside

If price breaks below 1.1150 and the bounce is weak, treat the uptrend as invalidated. That is not an immediate signal to reverse and sell. First check whether the dollar index is moving in step: if the dollar index is rising and front-end Treasury yields are climbing, the driver comes from rate expectations rather than technical selling, and the decline is likely to persist further.

Turning key levels into a trading plan

A conservative approach is to wait for confirmation of the range break before assessing the trade. A more active approach should still place the stop where the structure fails rather than at a fixed number of pips. Position size should be derived from the stop distance: decide the amount you are willing to lose on the trade, then divide by the distance from entry to stop to get the lot size.

Whichever approach you choose, write the invalidation condition down before entering. When price reaches it, act — do not revise it mid-trade because of the day's headlines.