EUR/USD Bullish Bias Intact Despite Late-Day Reversal; 1.0950 in Focus

EUR/USD Bullish Bias Intact Despite Late-Day Reversal; 1.0950 in Focus

EUR/USD surged to a four-month high at 1.08885 on Friday, driven initially by narrowing German-U.S. yield spreads following softer-than-expected components in the U.S. February payroll report. However, the pair failed to sustain these gains, retreating as Treasury yields rebounded and gold prices declined sharply, pushing USD broadly higher. Comments from Fed officials, along with renewed strength in USD/CNH, further reinforced the dollar recovery, bringing EUR/USD back to trade near 1.0845-50 late in the session. Despite the pullback, the broader technical outlook remains constructive, with the pair holding firmly above key support levels including the 200-day moving average at 1.0675 and the 61.8% Fibonacci retracement of the November-January decline at 1.0795.

Technical indicators remain supportive of further upside. The relative strength index (RSI) is trending higher and has yet to signal overbought conditions, while Bollinger Bands continue to widen, reflecting potential for increased volatility and further bullish momentum. Immediate resistance now lies at 1.08885 (Friday’s high), followed by a crucial resistance zone near 1.0930-1.0950. A sustained break above this level could trigger significant stop-loss buying, opening up a path toward psychological resistance at 1.1000, and ultimately targeting the October 2024 high near 1.1075.

Looking ahead, market sentiment will hinge on further U.S. economic data, including next week’s CPI and retail sales reports, which could confirm whether the U.S. economy is indeed diverging negatively relative to the euro zone. If signs of U.S. economic softness persist, EUR/USD will likely retest and potentially break above recent highs. Conversely, a stronger U.S. data set or renewed dollar strength driven by safe-haven flows could limit euro gains, pushing EUR/USD back toward initial support at 1.0795.