EURUSD - The 1.140 Zone Is the Decision Point: Rejection Confirms Wave (c) to 1.119, Breakout Challenges the Entire Bearish Structure
EURUSD - The 1.140 Zone Is the Decision Point: Rejection Confirms Wave (c) to 1.119, Breakout Challenges the Entire Bearish Structure
Reference data | as of 01/07/2026, 13:50 GMT+7
| Field | Value | Source |
|---|---|---|
| EURUSD | 1.1403 | TradingView live (-0.16%) |
| DXY | 101.3 | sidebar live |
| US 10Y Yield | 4.46% | sidebar live |
| US 2Y Yield | 4.17% | sidebar live |
| DE 10Y Yield | 2.92% | sidebar live |
| DE-US 10Y Spread (corrected) | -1.54% | DE10Y minus US10Y |
| US Real Yield (corrected) | +0.26% | US10Y minus CPI 4.2% |
| US CPI YoY (actual) | 4.2% | BLS May 2026 |
| Eurozone CPI YoY | 2.2% | Eurostat (pipeline) |
| Fed policy rate | 4.25-4.50% | Hold + hawkish bias Warsh |
| ECB deposit rate | 2.00% | neutral hold (corrected) |
| VIX | 16.4 | sidebar live (-6.8%) |
| SPX | 7,496 | sidebar live |
| JP 10Y Yield | 2.70% | sidebar live |
| GB 10Y Yield | 4.76% | sidebar live |
| USOIL | 69.4 | sidebar live |
Data quality warning. Pipeline US CPI 2.4% stale; actual 4.2% (BLS May 2026). Pipeline real yield calculation 2.018% wrong; actual +0.26% (US10Y 4.46% minus CPI 4.2%). Pipeline DE10Y 2.99% wrong; actual 2.92%. Pipeline DE-US spread -1.428% wrong; actual -1.54%. Pipeline ECB "cutting cycle 2.50%" wrong; actual neutral hold 2.00%. Pipeline US2Y 3.732% wrong; actual 4.17% (sidebar live). Pipeline JP10Y 1.47% stale; actual 2.70%.
L0 - Regime Identification
EURUSD trades at 1.1403 at midday on 1 July, down -0.16% on the session. Price is testing a critical decision zone: the "Wait for Price Rejection or Breakout" area marked clearly on the D1 chart at approximately 1.138-1.155. This is where the market will determine whether wave (c) continues lower toward 1.119, or whether an unexpected breakout challenges the bearish structure that has been in place since the ~1.195 peak in February 2026.
Following the wave 5 high near 1.195, EURUSD formed an ABC corrective sequence and is currently within the wave (c) of the larger decline. The 1.138-1.155 zone is the pivotal zone for this week's bias.
Regime: High Bear, awaiting confirmation of rejection at 1.138-1.155 for wave (c) to accelerate toward 1.119.
L1 - Driver Stack
The first bearish driver is the DE-US 10Y spread of -1.54% (DE10Y 2.92% versus US10Y 4.46%) -- the rate differential is entirely unfavourable for EUR, creating a continuous carry drag on EURUSD. The second is the corrected US real yield of +0.26% (US10Y 4.46% minus actual CPI 4.2%) -- positive and USD-supportive, though materially lower than the pipeline's erroneous 2.018% figure. The third is Fed Warsh maintaining a hawkish hold, with Fed Governor Hammack signalling this session that "inflation is too high; may need higher interest rates" -- a direct hawkish signal reinforcing the regime. The fourth is the ECB having reached neutral hold at 2.00% (pipeline wrongly reports "cutting 2.50%") -- no further dovish room, removing a potential bullish EUR catalyst. The fifth is the technical structure: wave (c) is running with RSI in a confirmed downtrend.
Near-term support factors: VIX dropped sharply -6.8% to 16.4 this session -- the improving risk-on environment creates short-term USD headwind. Lagarde's hawkish Sintra remarks ("nothing has called into question our decision to raise rates") provide marginal EUR support at the margin. Oil falling back below 70 reduces imported inflation expectations but does not alter Fed trajectory.
L2 - Macro Snapshot
US side: the Fed under Warsh is maintaining its hawkish stance post-17 June FOMC. US10Y 4.46%, US2Y 4.17% -- both materially higher than the stale pipeline figures (3.732% for 2Y is entirely wrong per sidebar live). 10Y-2Y curve spread: 4.46% minus 4.17% equals +29bps, mild steepening. Corrected real yield: +0.26% -- slightly higher than last week as US10Y has ticked up. Fed Governor Hammack's Q&A on CNBC today delivered a clear signal: "inflation too high; may need higher interest rates." Consumer spending intent improving per Conference Board. Summary: USD macro support remains intact.
Eurozone side: ECB neutral hold at 2.00% (pipeline "cutting 2.50%" wrong). DE10Y 2.92% (pipeline 2.99% wrong). Lagarde hawkish at Sintra signals the ECB is not rushing toward further dovishness, but not yet proactively hawkish enough to deliver a bullish EUR catalyst. Eurozone CPI 2.2% (pipeline) -- near ECB's 2% target, partly explaining why the ECB stopped cutting.
DE-US 10Y spread: 2.92% minus 4.46% equals -1.54%, entirely unfavourable for EUR on carry.
Oil returning below 70 (USOIL 69.4): deflationary signal for the eurozone economy. Does not directly change ECB trajectory but confirms external disinflationary pressure.
VIX 16.4 (-6.8%): meaningful risk-on improvement this session -- typically creates a USD headwind. However, in the current stagflationary US environment with CPI at 4.2%, the risk-on / USD-off relationship is non-linear.
L3 - HTF Structure (D1 Chart)
From the major peak near 1.195 in February 2026, EURUSD has formed a complex declining sequence:
Following the 1.195 peak, a corrective structure formed wave (b) near 1.190. Then a sharp decline through sub-waves 1-2-3-4-5 completed wave (a) at approximately 1.137 (labelled "(a)" on chart). Wave (b) recovered to 1.183-1.184 (labelled "2" and resistance level 1.18430). EURUSD is currently within wave (c) declining.
Within wave (c): sub-wave 1 lower, sub-wave 2 corrected, sub-wave 3 declined sharply through the 1.155-1.157 level, sub-wave 4 produced a minor bounce, and sub-wave 5/(c) is currently running toward the terminal target.
Key levels:
- Wave 5 high (major): ~1.195
- Wave (b) peak: ~1.190
- Resistance 1: 1.18430 (red horizontal, already broken)
- Resistance 2: 1.17849 (red horizontal)
- Resistance 3: 1.16223 (intermediate resistance)
- Current decision zone: 1.138-1.155 ("Wait for Price Rejection or Breakout" on chart)
- Current price: 1.1403 -- inside the zone
- Wave (c)/(5) target: 1.119-1.120 (1.11904 horizontal on chart)
- Deeper support: 1.11344
- Invalidation: decisive break above 1.157 with volume -- suggests wave (c) may have concluded early
RSI D1: in a confirmed downtrend from elevated levels, no clear bullish divergence at this stage.
Critical characteristic: the 1.138-1.155 zone is the "Battle Zone" -- bulls and bears are contesting here. A daily close below 1.138 confirms rejection and accelerates wave 5/(c) toward 1.119. A daily close above 1.157 requires reassessment of the entire wave count.
L4 - Intermarket Cross-Check
DE-US spread -1.54%: the clearest carry driver for EURUSD. Pipeline reports -1.428% (directionally correct but using wrong data). A negative 154bps spread means holding USD and shorting EUR generates positive carry -- a constant gravitational pull on EURUSD during any bounce.
USDJPY 162.658 (+0.089): USD strong across the board, not EUR-specific. GBPUSD 1.324 (-0.00194): GBP also weak. Both confirm this is a USD strength story, not just EUR weakness.
EURJPY 185.481 (-0.214): EUR weaker than even the JPY (which is itself under pressure). This implies intrinsic EUR weakness beyond the USD strength narrative.
XAUUSD -36.465 (-0.9%): gold continues declining in its wave (4). Inverse USD-gold relationship functioning -- USD strength confirmed broadly.
USOIL 69.4 (-0.54): back below 70. Deflationary. Fed Hammack today mentioned "inflation too high" -- confirms the Fed is not softening despite lower oil.
L5 - Event Risk
Today and this week:
1 July -- ADP Non-Farm (USD): private payrolls preview for NFP. Strong print = additional Fed hawkish narrative, bearish EURUSD. Weak print = short-term technical bounce.
3 July -- Official NFP (USD): the week's dominant catalyst for all USD pairs. Above 220K with wage growth = USD strength intensifies, wave (c) accelerates toward 1.119. Miss = temporary bounce without altering the wave (c) structure.
Ongoing Fed communication: Governor Hammack already signalled hawkish today. Monitor additional Fed speakers before NFP.
ECB communication: watch for post-Sintra follow-up statements to confirm whether the ECB is shifting from neutral toward a more explicitly hawkish stance.
Do not chase EURUSD short immediately at 1.140 without rejection confirmation -- wait for a daily close below 1.138.
| Scenario | Target | Probability |
|---|---|---|
| Rejection at 1.138-1.155, wave 5/(c) to 1.119-1.120 | 1.119-1.120 | 60% |
| Sideways within 1.135-1.155 ahead of NFP catalyst | 1.135-1.155 | 20% |
| NFP miss, bounce to 1.157-1.165 | 1.157-1.165 | 15% |
| Breakout above 1.165 reverses the bearish structure | > 1.165 | 5% |
L6 - Conviction Scorecard
| Factor | Bear EURUSD | Bull EURUSD | Weight |
|---|---|---|---|
| DE-US 10Y spread -1.54% (carry entirely against EUR) | Bearish | -- | High |
| Fed Warsh hawkish, Hammack "may need higher rates" | Bearish | -- | High |
| D1 structure: wave (c) running, RSI downtrend | Bearish | -- | High |
| ECB neutral hold 2.00%, no further dovish catalyst | Bearish | -- | High |
| US real yield +0.26% (positive, USD-supportive) | Bearish | -- | Medium |
| USOIL 69.4 below 70, deflationary | Bearish EUR | -- | Medium |
| VIX 16.4 (-6.8%), strong risk-on this session | -- | Near-term USD headwind | Low |
| Lagarde hawkish at Sintra | -- | Marginal EUR support | Low |
Conviction: High Bear, awaiting rejection confirmation. Four high-weight bearish factors aligned: -1.54% carry spread, Fed hawkish with Hammack signal today, wave (c) technical structure, ECB exhausted of dovish room. This is the highest conviction bearish call across the 9-instrument pipeline this week. The single remaining requirement: a daily close below 1.138 confirming rejection from the "Battle Zone."
L7 - Time Horizon
24-48h: ADP today is the preview. EURUSD ranges 1.134-1.150 ahead of NFP. A daily close below 1.138 is the bear confirmation signal. A daily close above 1.150 warrants additional caution.
1-2 weeks: NFP 3 July is the decisive catalyst. Strong: acceleration toward 1.119-1.120, possible test below 1.119. Weak: bounce toward 1.157-1.165, wave (c) needs more time. Monitoring range: 1.119-1.155.
1-3 months: Wave (c) completing at 1.119-1.120 opens a long-term recovery opportunity. But if wave (c) extends: 1.079-1.073 (Fib 0.618 of the prior full advance) becomes the terminal target. This outcome depends on whether the ECB shifts clearly hawkish or the Fed turns dovish in H2 2026.
L8 - Invalidation Conditions
Wave (c) thesis fails if EURUSD posts a daily close above 1.157 with confirming volume -- holding the 1.155-1.157 resistance means wave (c) may have already completed.
Bearish continuation confirmed if EURUSD posts a daily close below 1.138 -- clear rejection from the "Battle Zone," wave 5/(c) accelerates toward 1.119-1.120.
Most important signal this week: today's and tomorrow's daily closes in relation to the 1.138-1.155 zone. Then NFP on 3 July. These two data points will establish the trading bias for all of July.
Disclaimer: This analysis is for informational and educational purposes only and does not constitute financial advice. Readers are solely responsible for their own trading decisions.
Weekly institutional macro analysis across 9 instruments.
Telegram: t.me/intermarket_edge
TradingView: IntermarketEdgeFX2026
Intermarket Edge | Published 01/07/2026