Several macroeconomic factors are shaping EUR/USD’s trajectory. Recent inflation data shows consumer prices rising by 2.3% year-on-year, slightly lower than the previous month. Core inflation remains at 2.8%, suggesting that price pressures are easing. While the Federal Reserve is expected to cut rates later in the year, markets are pricing in two 25-basis-point rate cuts by December. A more dovish Fed could weaken the dollar, supporting further euro strength. The European Central Bank has maintained a cautious stance, balancing inflation control with economic growth. If the ECB signals a pause in rate hikes or hints at future easing, it could limit the euro’s upside. However, stable Eurozone economic data could support further gains. Global trade tensions, particularly between the U.S. and China, continue to impact currency markets. Any resolution or escalation in trade negotiations could influence the dollar’s strength, indirectly affecting EUR/USD movements.
From a technical perspective, if EUR/USD breaks above 1.115, the next resistance is 1.12, followed by 1.22 in the longer term. A weaker dollar and stable Eurozone data could support this move. On the other hand, a rejection at 1.11 could push the pair lower, with 1.024 as a key support level. Technical indicators suggest the pair is approaching overbought conditions, increasing the likelihood of a pullback.
The EUR/USD pair has been gaining strength, currently testing the 1.115 level on the monthly timeframe. This bullish movement mirrors the early presidency of Donald Trump, when the euro also showed resilience against the U.S. dollar. Based on historical trends, traders are eyeing a potential rally toward 1.22 if momentum continues. However, a rejection at 1.115 could trigger a reversal, potentially bringing the pair back to 1.024 and reinforcing a bearish pattern.