The EUR/USD pair is currently positioned near 1.1950, fluctuating within a narrow range between intraday peaks just below 1.2000 and a support level around 1.1900. The recent movement originating from the 1.1680 zone peaked around 1.2082–1.2085, a range that corresponds with a 261.8% Fibonacci extension of the previous 1.16–1.20 segment. The specified zone represents the existing medium-term ceiling, indicating the level at which new buyers have retreated. The short-term structure remains favorable: the price maintains its position above the ascending trendline from 1.1680, stays above the 1.1895 area where the 50-period moving average on the intraday chart is located, and continues to establish higher lows above 1.1900. Immediate support is established first at 1.1960–1.1935, where the trendline and the last breakout band converge, followed by 1.1900 as the crucial intraday floor. A further decline could reveal 1.1850, the low from 27 January that marks the boundary of the ongoing bullish phase. On the upside, the initial resistance is the psychological 1.2000 barrier, succeeded by 1.2050, and then the 1.2082–1.2085 high, which stands as the critical level euro bulls must surpass to pave the way toward 1.22+.
The US Dollar Index is currently positioned between 96.00 and 96.15, hovering close to a four-year low and reflecting a decline of over 2% in 2026. A distinct descending triangle on the daily chart has broken down through the 97.50–97.00 support band, which now serves as resistance. The price continues to trade significantly under the 50-day moving average, indicating persistent selling pressure. Recent candlestick patterns exhibit long bearish bodies, the RSI is positioned below 40, and any attempts at bounces are met with selling rather than sustained buying interest. Fibonacci projections indicate that the upcoming support level is around 95.60, with additional risk extending towards 94.80 should that level not hold. The Fed funds rate remains firmly within the 3.50%–3.75% range following three prior reductions. The recent meeting resulted in rates remaining steady, as Stephen Miran and Christopher Waller advocated for a 25 basis point reduction. Jerome Powell reiterated that inflation remains above the 2% target, which may appear hawkish in theory, but markets respond not to the language used; they respond to credibility. Market participants are incorporating a stable policy outlook as we approach the conclusion of the current quarter, with expectations extending until Powell’s term concludes in May. Additionally, there is an anticipation of approximately two rate cuts occurring later in 2026. The simultaneous occurrence of a criminal investigation involving Powell and political maneuvers targeting Lisa Cook casts doubt on the independence of the Federal Reserve. The influence of political factors contributes to a decline in the dollar, occurring even in the absence of significant rate cuts.
The EUR component of EUR/USD benefits from supportive data, yet it contends with its own policy-related uncertainties. Confidence numbers have shown a significant improvement. Eurozone Consumer Confidence remains steady at -12.4, aligning with expectations. However, the broader Economic Sentiment Index experienced an increase, rising from 97.2 to 99.4, contrary to the anticipated decline to 97.0. Industrial Confidence has shown an improvement, moving from -8.1 to -6.8, while Services Sentiment increased from 5.8 to 7.2, surpassing expectations of approximately 6.0. The performance grid indicates that the EUR is slightly stronger than the USD today and more robust than the GBP, suggesting that there is demand for the euro despite the pair’s consolidation. The policy front is where the initial signs of weakness emerge. The prevailing narrative that ECB policy is “in a good place” is beginning to show signs of instability. Martin Kocher has for the first time since June last year publicly suggested rate cuts as a possibility, indicating that some members of the Governing Council are no longer entirely at ease with the existing conditions. Simultaneously, German Chancellor Friedrich Merz has expressed concerns that the weakness of the dollar is negatively impacting German exports, serving as an indirect caution that significant strength in the EUR/USD could lead to increased pressure on the ECB. The interplay of factors sustains the euro around its present levels, yet suggests caution in expecting a unilateral advance significantly past the 1.21–1.22 range without potential policy resistance. On short-term charts, EUR/USD is evidently consolidating its gains rather than indicating a trend reversal. Following the rejection around 1.2082–1.2085, the pullback has encountered resistance in the 1.1900 region, where buyers have consistently protected that level. The 2-hour chart displays candles with small bodies and balanced wicks, indicating a pause in the trend rather than a pronounced distribution phase. The RSI on the 4-hour chart is positioned around 60, suggesting a moderately positive sentiment. Meanwhile, the MACD has dipped below the signal line, and the histogram has shown a slight negative shift, indicating a decline in upward momentum rather than a clear sign of weakness. Provided that closes remain above 1.1935–1.1900, any dips appear to present opportunities rather than signaling the onset of a more significant decline. A sustained break below 1.1900, followed by a move under 1.1850, would indicate that the market is no longer inclined to maintain the recent higher-low structure, thereby shifting the bias from constructive to neutral.
The dynamics affecting the USD are becoming more influenced by political factors and trade strategies, rather than solely by interest rate differentials. The markets are responding to President Trump’s unpredictable tariff threats and overt criticism of the Fed, which are seen as direct challenges to two fundamental supports of dollar strength: consistent trade leadership and institutional stability. Despite policy rates remaining significantly above zero, the currency behaves as if it possesses a diminishing premium. The decline of over 2% in the DXY year-to-date, even in the absence of significant new easing, underscores the considerable weight investors place on governance risk. Treasury Secretary Scott Bessent has emphasized that Washington continues to advocate for a “strong-dollar” policy; however, these statements are at odds with reports regarding efforts to alter the Fed Board and politically influence the Chair. Major asset managers recognize that the independence of central banks is a fundamental factor in maintaining the dollar’s status as a reserve currency; any prolonged challenge to that independence poses a structural risk to the currency. This environment supports EUR/USD appreciation, provided the Eurozone avoids a significant self-inflicted shock. The short-term trajectory for EUR/USD will hinge on forthcoming US data releases. Weekly Initial Jobless Claims are projected to rise slightly to approximately 205–206K, an increase from the previous figure of 200K. A reading well above that range would strengthen the narrative of a slowly easing labor market and maintain downward pressure on the dollar; conversely, an unexpected decline would provide only fleeting support for the currency as Federal Reserve dynamics shape the outlook in the medium term. Later in the session, US Factory Orders are anticipated to recover by approximately 1.6% following a 1.3% decrease, suggesting a potential stabilization in the manufacturing sector. The Goods and Services Trade Balance is projected to expand to approximately -$40.5 billion, up from -$29.4 billion; this widening deficit aligns with the trend of a weaker dollar and a US economy that continues to import more than it exports. The recent positive sentiment surrounding the Euro is already providing support for the currency. The primary concern in the upcoming weeks revolves around a potential change in ECB communication. A more explicit discussion regarding rate cuts or an increased volume of complaints concerning euro strength would serve as the initial signal that policymakers aim to prevent further appreciation beyond the 1.21–1.22 range.
The shift in EUR/USD towards 1.20 has emerged as a significant macro indicator beyond foreign exchange markets. In commodity markets, fluctuations in the pair alter the dynamics of relative pricing power. Typically, an appreciating euro would diminish the competitive edge of European exporters relative to US suppliers, especially in the grains sector. The recent behavior exhibits greater complexity. With EUR/USD near 1.20, the performance of Paris and Chicago wheat futures has not aligned with the fluctuations in the currency. The global demand and supply dynamics are effectively mitigating the impact of the FX shock. The euro’s strength is influencing not just outright prices but also the strategies producers employ for hedging, the management of short exposure by speculators, and the distribution of pricing power among benchmarks. For macro desks, EUR/USD in the range of 1.19–1.20 currently serves as an indicator of confidence in US policy relative to European stability. As the euro maintains its strength while the DXY approaches the range of 95.60–94.80, investment strategies are viewing the dollar as the weaker component and increasingly favoring alternatives, such as the euro.
At approximately 1.1950, with EUR/USD fluctuating within a 1.1900–1.2000 range, the DXY positioned around 96.00 and trending toward 95.60, Eurozone sentiment indices exceeding expectations, and initial signs of ECB unease regarding current levels, the overall evidence favors a positive outlook on the pair. From a technical perspective, the current structure remains indicative of an uptrend in consolidation: the price is maintaining its position above the ascending trendline originating from 1.1680, is trading above the 1.1895 50-period moving average, and is adhering to the pattern of higher lows above 1.1900, while sellers have been unable to induce a breakdown despite the presence of weaker momentum. At its core, the euro gains from enhanced domestic data and a context where the independence of the Fed, US trade policy, and political interference exert more pressure on the dollar than the existing rate settings can counterbalance. The refined trading strategy positions EUR/USD as a Buy, emphasizing risk management by targeting dips within the 1.1935–1.1900 range as accumulation zones, while establishing risk parameters beneath 1.1850. Upside reference levels are established at 1.2000, 1.2050, and the high range of 1.2082–1.2085. A daily close above that cluster would pave the way for a move toward 1.22+. A decisive break below 1.1850 would neutralize the bullish bias and necessitate a reassessment; however, current data and price action do not support that scenario as the base case.