EUR/USD on the Rise: Strong Recovery Breaks Key Resistance Levels

EUR/USD

Prediction: Increase

EUR/USD is showing strong recovery after a prolonged downtrend. The pair has broken through key resistance levels and is currently trading around 1.08145, approaching the major resistance zone at 1.08747 - 1.09302. The short-term trend is turning bullish, but price action around key resistance levels will determine whether the uptrend continues.

FUNDAMENTAL ANALYSIS

1. Financial Market Impact

Global stock market rally: The U.S. temporarily lifting auto tariffs on Canada and Mexico has improved risk sentiment, boosting global equities. This has weakened demand for the USD, supporting EUR/USD’s upward movement.

German bond yields surge: Germany’s €500 billion infrastructure spending plan and financial rule relaxation have driven higher bond yields, attracting capital inflows into the Eurozone and strengthening the EUR.

USD weakness: The U.S. Dollar Index (DXY) has dropped to 104.11, its lowest level since November 2024, providing additional support for EUR/USD.

2. ECB Monetary Policy

The ECB is expected to cut interest rates during today’s (March 6, 2025) meeting: If the ECB is less dovish than expected, the EUR could extend its rally.

However, if the ECB signals aggressive rate cuts, the EUR may face downward pressure. Germany’s fiscal spending plan: The €500 billion investment initiative could help stabilize the Eurozone economy, reducing the need for deeper ECB rate cuts, thereby supporting the EUR.

3. Global Trade Impact

U.S. Tariff Risks:

● Trump remains aggressive on trade policies toward the EU, increasing the risk of future tariffs, which could pressure the EUR in the long run.

● MUFG warns that the current EUR rally may not last if Trump escalates trade tensions with Europe.

China’s Economic Growth:

● China has pledged further economic stimulus, supporting global growth.

● A stronger global economy could indirectly support EUR/USD if risk appetite remains stable.

TECHNICAL ANALYSIS

Key Resistance Levels

● 1.08145 – Immediate resistance; a breakout could open the path to 1.08747 and potentially 1.09302.

● 1.09302 – Major resistance; strong selling pressure may emerge here.

Key Support Levels

● 1.07207 – Nearest support level.

● 1.06281 – Critical support, aligned with the 200 EMA; if the price retraces here, it could form a base for a long-term uptrend.

Technical Indicators:

EMA 200 Breakout: EUR/USD has broken above the 200 EMA at 1.07207, confirming a trend reversal to bullish.

RSI at 71.65: Currently in the overbought zone, signaling a possible short-term correction.

 

 

 

 

 

 

 

Disclaimer

Derivative investments involve significant risks and may result in the loss of the capital you invest. You are advised to carefully read and study the legality of the company, products, and trading rules before deciding to invest your money. Be responsible and accountable in your trading.

RISK WARNING IN TRADING

Transactions via margin involve products that use leverage mechanisms, carry high risks, and are certainly not suitable for all investors. THERE IS NO GUARANTEE OF PROFIT on your investment, so be wary of those who guarantee profits in trading. You are advised not to use funds if you are not prepared to incur losses. Before deciding to trade, ensure that you understand the risks involved and also consider your experience.