The EUR/USD pair increased by 0.6%, reaching 1.1560. For months, it struggled to break above 1.1500, acting as a barrier. Now, buyers are pushing to surpass this level. If it goes above April’s high of 1.1572, the pair will hit its highest point since 2021. This rise is fueled by optimism about Europe’s economy and worries about the US economy.

US Dollar Concerns

Demand for the US dollar is dropping due to uncertainty and inconsistent policies from its government. If EUR/USD breaks current resistance, it could quickly reach 1.1600 before it settles. The previous sections described a recent move in the EUR/USD currency pair, where the Euro rose to 1.1560 from 1.1500, a level it had trouble breaking through for months. Now, strong buying pressure may push the price higher. If it exceeds 1.1572—the peak in April—it will represent the Euro’s best performance against the Dollar since 2021. This shift is fueled by rising confidence in Europe’s economy and a weaker outlook for the US. Typically viewed as a safe choice, the Dollar is less sought after now due to mixed signals from US policies and growing concerns in American markets. If the pair continues to rise, 1.1600 is the next target, where it may stabilize. From a trading standpoint, recent patterns suggest potential further gains. The price has broken through significant resistance, supported by broader economic themes. This isn’t just about daily charts; it’s about differing investor confidence between Europe and the US. Currently, we don’t expect those holding short contracts to benefit from declines above 1.1550 unless momentum shows signs of slowing. Conversely, momentum traders may find that staying above April’s high opens up more room toward 1.1600, especially since there are no notable resistance levels past that point. The next few trading sessions will be key to understanding this thin layer of resistance.

Market Reactions And Predictions

We believe that significant positions are unlikely to form below 1.1500 soon, given the recent strong push and the underlying economic story. While sharp pullbacks can happen in any rally, how the market reacts to them will provide further insight. If pullbacks are gentle, technical buyers may see them as chances to enter rather than signs of a reversal. We’ve observed that US policy signals are becoming inconsistent. When financial and economic guidelines lack clarity, the Dollar tends to weaken because markets struggle to assess risk accurately. Traders should factor this unpredictability into their models regarding the Federal Reserve’s policies. It’s also important to note that derivatives related to major currency pairs typically respond quickly to central bank news. However, this week, factors like bond yields and inflation expectations could also react strongly to changing sentiment. Keeping an eye on these elements offers an advantage in predicting volatility spikes and helps reduce risk before the wider market reacts. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now