EURUSD Gains Momentum Despite Mixed Signals
The EURUSD pair surged on Tuesday, reaching the upper bounds of the daily trading range as it flirted with the psychologically significant 1.1200 level. This move came on the back of sustained euro strength during the European session and spilled into early Asian market hours. While some momentum indicators hint at caution, the overall market tone leans firmly bullish, driven by supportive technical underpinnings and resilient sentiment across eurozone assets.
Bulls in Control Above Key Support Levels
Price action in EURUSD continues to reflect a bullish structure, with the pair holding firm above key support zones. Tuesday’s session saw a clear break toward 1.1200, fueled by persistent demand from euro buyers. Importantly, the pair remains well-supported by both horizontal and dynamic levels, helping to cushion any potential pullbacks.
Key support levels include:
- 1.1130: a prior resistance turned support
- 1.1090: aligned with a recent consolidation zone
- 1.1040: anchored by the 50-day SMA
This layering of support zones bolsters confidence in the EURUSD ability to maintain altitude, especially if near-term consolidation occurs below 1.1200.
Mixed Momentum Indicators Suggest Caution Ahead
Despite the bullish breakout, momentum indicators paint a more nuanced picture. The Relative Strength Index (RSI) currently hovers in the mid-40s, a region that typically signals neutral momentum. It neither confirms overbought conditions nor offers a clear bullish signal, suggesting the rally still has room to grow, but with caution.
The Moving Average Convergence Divergence (MACD), on the other hand, continues to show a bearish crossover, flashing a short-term sell signal. This divergence between price action and momentum indicators highlights a potential tug-of-war between bulls and bears in the coming sessions.
Supporting the bullish case, however, is the Bull Bear Power indicator, which continues to lean positively. The Stochastic %K, positioned near 16, also suggests oversold territory, often seen as a precursor to upward corrections. Similarly, the Ultimate Oscillator, while muted in the 40s, is gradually rising, hinting at slow but steady bullish traction.
Technical Structure of EURUSD Remains Constructive
From a structural standpoint, the EURUSD pair remains in a healthy uptrend. A confluence of long-term moving averages continues to support the bullish bias:
- The 100-day SMA and 200-day SMA both slope upward, indicating long-term trend health
- The 50-day EMA and 50-day SMA are also aligned with bullish sentiment
Notably, the 20-day SMA remains a key area of contention. Acting as short-term resistance, this level needs to be decisively broken to validate continued upside momentum. A clean break and hold above the 1.1200 threshold would likely propel the pair toward its next resistance zone at 1.1270, followed by 1.1335.
Fundamentals Offer Tentative Support
While the technical picture is in favor of the bulls, fundamentals are also playing a role in the pair’s latest advance. Recent eurozone data has shown signs of resilience, with Germany’s industrial output recovering modestly and eurozone inflation showing signs of stabilizing.
On the U.S. front, mixed economic data has introduced some uncertainty into the dollar’s path. Although the Federal Reserve remains cautious about declaring victory over inflation, markets are increasingly pricing in potential rate cuts in the second half of 2025. This dovish shift in expectations has put pressure on the dollar, allowing the euro to reclaim lost ground.
Geopolitical developments and market risk sentiment are also influencing flows. As global markets navigate tensions in the Middle East and trade uncertainties in Asia, investors are adjusting their portfolios toward safer, more stable regions — a dynamic that has modestly benefited the euro.
Short-Term Outlook: EURUSD Eyes on 1.1200 and Beyond
With EURUSD sitting just below the key 1.1200 mark, the next few sessions will be critical. A clean breakout above this level could act as a springboard toward fresh yearly highs. Traders should watch for:
- A sustained daily close above 1.1200
- Declining U.S. Treasury yields
- Softening U.S. data prints
- Eurozone inflation stabilization
In contrast, failure to break above 1.1200 or a strong rebound in the dollar could lead to a corrective dip toward the aforementioned support zones. That said, unless broader fundamentals shift sharply, the pair is unlikely to retrace deeply without first testing higher levels.
EURUSD Weekly Chart Highlights
Zooming out to the weekly timeframe, EUR/USD is attempting to resume its longer-term recovery trend that started in Q4 2024. The pair is now approaching a cluster of resistance near 1.1270–1.1300, which coincides with a long-term descending trendline.
Breaking this trendline would be a significant bullish development and could signal a much broader upside phase — potentially targeting the 1.1500 region over the next few months. However, failure to overcome this resistance cluster could see the pair consolidate in a wider range between 1.1000 and 1.1300.
Market Sentiment: Cautiously Optimistic
Traders and institutional participants remain cautiously optimistic. The euro is benefiting from rebalancing flows, soft dollar demand, and a positive technical backdrop. However, the mixed signals from short-term indicators like MACD and RSI serve as a reminder that momentum could stall if fundamentals don’t align.
Options markets reflect this uncertainty, with implied volatility rising slightly but not dramatically. This suggests markets are preparing for larger moves, but not necessarily bracing for extreme volatility.
Key Resistance and Support Levels
Level — Type — Importance
1.1270 — Resistance — High
1.1200 — Psychological — Medium
1.1130 — Support — Medium
1.1090 — Support — Medium
1.1040 — Support (SMA) — High
Trading Strategies Going Forward
For Bulls:
- Look for a breakout and daily close above 1.1200
- Target 1.1270 and 1.1335 in extension
- Use dips toward 1.1130/1.1090 as buying opportunities with tight stops
For Bears:
- Wait for rejection candles below 1.1200
- Target a retest of 1.1090 initially, with 1.1040 as deeper support
- Short-term positioning only recommended below 1.1130 with confirmation
Conclusion: Euro Bulls Eye Higher Ground
The EURUSD pair is showing encouraging signs of bullish continuity, even as short-term momentum appears mixed. With strong support below and a compelling technical structure, the path toward 1.1200 and beyond remains viable. However, the battle isn’t over, and traders should remain alert to upcoming data releases and any shift in Fed or ECB guidance.
If the euro clears 1.1200 decisively and follows through with a break above 1.1270, the road to 1.1500 opens wide. Until then, traders should watch for confirmation, manage risk closely, and stay alert to shifting macro narratives.
