EUR/USD Continues Its Strong Upward Momentum
The EUR/USD pair is currently exhibiting significant bullish momentum, having reached the 1.1200 level after a sharp rally. Trading near the upper boundary of its intraday range (between 1.09426 and 1.1220), the pair is now at new yearly highs. This strong movement is underpinned by solid technical indicators, suggesting the potential for further upside in the near future.
Technical Indicators Supporting EUR/USD Rally
Technically, the Relative Strength Index (RSI) sits at 70.98, indicating that the pair is in an overbought condition, but not to the extent that would signal an immediate reversal. The Moving Average Convergence Divergence (MACD) is flashing a buy signal, confirming the ongoing bullish momentum. The Williams Percent Range (-0.50) and Stochastic %K (68.41) are in neutral territory, indicating that there is still room for EUR/USD to extend its rally before a potential reversal takes place.
Key Moving Averages Reflect Bullish Trend
The 20-day Simple Moving Average (SMA) stands at 1.08865, the 100-day SMA at 1.05475, and the 200-day SMA at 1.07399. All of these are trending upward and remain well below current price levels, indicating strong support for the broader bullish trend. Moreover, the 10-day Exponential Moving Average (EMA) at 1.09561 and the 10-day SMA at 1.09285 further reinforce the short-term positive outlook for the pair, suggesting that the upward momentum is likely to continue unless a significant reversal occurs.
EUR/USD Key Support and Resistance Levels
Immediate support for EUR/USD is found at 1.10309, followed by 1.09606 and the 10-day EMA at 1.09561. Having already broken through the significant 1.1000 psychological level, EUR/USD is now targeting 1.1200 as the next major resistance. If the pair breaks above this resistance, further gains may follow. Given that EUR/USD is at yearly highs, resistance beyond the 1.1200 mark remains less defined, and traders may turn to psychological levels or Fibonacci projections to identify potential targets.
U.S. Dollar Weakness Contributes to EUR/USD Strength
The U.S. Dollar has faced pressure recently, contributing to the Euro's strength. The U.S. Dollar Index (DXY) has fallen to 102.34 as traders await the upcoming U.S. Consumer Price Index (CPI) data, which is expected to show a decrease in year-over-year inflation to 2.5%, down from 2.8%. This anticipated CPI reading, if met, could add further downward pressure on the Dollar, bolstering EUR/USD's upward trend. Additionally, President Trump's announcement of a 90-day pause on tariffs has also weakened the Dollar's sentiment.
Impact of the Fed's Interest Rate Outlook on EUR/USD
The Federal Reserve's interest rate policy will be crucial for the future direction of EUR/USD. The CME FedWatch Tool currently shows a 40% chance of a rate cut at the next Federal Reserve meeting, a notable decrease from 60% in previous weeks. The market’s changing rate expectations, alongside the weaker U.S. Dollar, are likely to benefit the Euro and support EUR/USD’s ongoing rally.
EUR/USD Outlook and Resistance Levels
With the pair now trading near yearly highs, the psychological 1.1200 level is the next key resistance point for EUR/USD. A break above this level could pave the way for further gains in the currency pair. On the downside, immediate support is found at 1.10309, followed by 1.09606 and the 10-day EMA at 1.09561. As long as these support levels hold, EUR/USD remains in a bullish trend, with potential for continued price appreciation in the coming days.
Conclusion: Bullish Sentiment Remains Strong for EUR/USD
The EUR/USD pair continues to show strong bullish momentum, supported by favorable technical indicators and a weaker U.S. Dollar. With key support levels holding and the pair nearing significant resistance at 1.1200, the outlook for EUR/USD remains positive. Market sentiment, including the easing of U.S. inflation concerns and President Trump's tariff pause, further strengthens the bullish case for the Euro. As long as EUR/USD remains above critical support levels, the trend is likely to continue, with 1.1200 marking the next major hurdle for the pair.
