EUR/USD longs saw a glimmer of hope Monday, rallying on news that President-elect Trump selected Scott Bessent as U.S. Treasury Secretary. Bessent’s reputation as a fiscal conservative and his potential to manage the U.S. budget deficit without aggressive rate hikes cheered bond investors, leading to a tightening of German-U.S. yield spreads. The narrowing yield differential provided a tailwind for EUR/USD, helping it recover from multi-session lows and challenge the 1.0500 psychological resistance. Despite a modest pullback late in the session, the pair retained most of its gains, closing near 1.0495.
Technically, EUR/USD broke above its 5-DMA, with the daily RSI rising, signaling the possibility of further upward momentum. Friday’s bullish hammer formation is another encouraging sign for bulls. Immediate resistance lies at 1.0530, followed by the key 1.0575-1.0600 zone, while support is observed near 1.0465 and the recent low of 1.0429. A failure to hold above these levels could signal renewed bearish pressure.
Looking ahead, U.S. consumer confidence and Case-Shiller home price data on Tuesday, along with German economic indicators, will guide market sentiment. However, risks from a weakening eurozone economy and the potential for a deeper ECB rate cut could overshadow the optimism surrounding Bessent’s nomination, keeping EUR/USD bulls on edge.