EUR/USD Compression: Setup for Rally or Bear Trap?EUR/USDOANDA:EURUSDDomicChainaHello everyone, On the H4 timeframe, EUR/USD is showing a notable structure as price moves within a rising wedge following a prior downtrend. This type of formation is typically associated with a corrective move rather than a true reversal—especially when price remains below key moving averages and has yet to break through overhead resistance. After the sharp decline from the 1.18 area to below 1.145, the pair found a temporary bottom and began a gradual recovery. However, this recovery is occurring within a narrowing range, forming higher lows but without strong bullish momentum. Currently, price is testing the short-term moving average along with the resistance zone around 1.1600–1.1650, which also aligns with a previous supply area. This is a critical zone that will likely determine whether the market can transition into a bullish structure or if this is simply a corrective bounce within a broader downtrend. Looking deeper, the moving averages are still sloping downward and acting as dynamic resistance. This suggests that the primary trend remains bearish. The higher-probability scenario, in my view, is that price may face rejection in the current zone and rotate back down toward the 1.1500 support area—or even lower if selling pressure re-emerges. From a macro perspective, the US dollar continues to hold strength as the Federal Reserve maintains a cautious stance on rate cuts. Elevated Treasury yields are still supporting the USD, which in turn puts pressure on EUR/USD. Meanwhile, the euro lacks strong fundamental catalysts at the moment, making it difficult for the pair to sustain a meaningful breakout.