EUR/USD Hits 4-Month High; Bulls Eye Further Gains on Weakening USD

EUR/USD Hits 4-Month High; Bulls Eye Further Gains on Weakening USD

EUR/USD surged to a four-month high at 1.0528 on Wednesday, driven by falling U.S. Treasury yields, softer-than-expected U.S. ADP employment data, and tighter German-U.S. yield spreads. The pair’s decisive rally above key technical resistance at the February high (1.0534) confirms bullish momentum, with rising RSI indicators signaling continued upside potential. The bullish breakout also aligns with February’s monthly bullish doji candle, strongly reinforcing the positive technical outlook.

The immediate technical landscape remains favorable for further gains, with key short-term supports now established at 1.0500 and 1.0465 (former resistance levels turned support). Further upside targets include the November 2024 high near 1.0630, with potential to test the 2024 yearly peak around 1.0700 if bullish conditions persist. RSI indicators are supportive, and Bollinger Bands have expanded, suggesting volatility could remain elevated and supportive of upward momentum.

In the short term, the EUR/USD rally faces key tests from upcoming U.S. economic data—particularly Thursday’s weekly jobless claims and Friday’s February payroll report. If these reports confirm a weakening U.S. employment picture, the dollar may weaken further, fueling the pair’s gains. Additionally, improving sentiment regarding China’s planned fiscal stimulus may indirectly boost the eurozone economy and thus the euro itself. However, any surprisingly strong U.S. economic figures could slow or temporarily halt EUR/USD’s bullish advance, keeping the market cautious ahead of these releases.