EUR/USD Climbs Toward 1.14 as Dollar Weakness Revives Bullish Bets
Technical Analysis:
EUR/USD bulls regained control on Tuesday, lifted primarily by renewed weakness in the U.S. dollar amid heightened tariff uncertainty and investor caution ahead of Wednesday’s crucial Federal Reserve policy decision. The pair has oscillated around its 200-hour moving average at 1.1347, forming a consolidation pattern that underscores ongoing market indecision. However, today’s resilience after Germany’s Friedrich Merz secured the chancellorship in a second round of voting offers fundamental optimism, potentially removing near-term political uncertainty from the euro zone’s largest economy.
Technically, EUR/USD’s recovery from intra-day lows (capped solidly at 1.1250–80 support) suggests bullish sentiment is reasserting itself following brief dips. Immediate resistance near 1.1400–1.1425 has repeatedly stalled recent rallies, but a decisive break and daily close above this zone would significantly improve the technical outlook, paving the way towards retesting the yearly highs near 1.1500. Short-term momentum indicators like hourly and daily RSI are turning higher, underscoring the shift back towards bullish dynamics.
Looking forward, the Fed’s upcoming policy announcement and Chair Jerome Powell’s press conference will be pivotal for EUR/USD direction. Any indication of dovishness or caution on U.S. growth prospects—particularly due to trade tensions—would likely amplify dollar weakness and accelerate EUR/USD’s upward move. Conversely, renewed Fed hawkishness or a surprisingly resilient tone could trigger another test of key support in the 1.1250–80 area. As such, traders remain highly cautious yet mildly bullish, eyeing further cues from the central bank.