EUR/USD strengthens on bullish momentum: The reasons behind the bullish market factors

Today, the EUR/USD currency pair experienced momentum during the Asian session, with the spot price trading around 1.1735, up 0.10%. It is now above the lows from four days ago at 1.1660. The strength of this pair is driven by fundamentally changing market conditions.

The monetary environment of the two central banks supports an upward adjustment

The differing directions of the two central banks are creating an environment conducive to the upward movement of EUR/USD. On one hand, the US dollar (USD) has been weakening due to changing expectations regarding the Federal Reserve (Fed) policy amid easing signals from the economic data.

Meanwhile, market data suggests that the European Central Bank (ECB) may pause its rate cuts in the near future. This scenario helps strengthen the euro and creates a clear divergence between the two currencies. The combined factors thus support a rise in EUR/USD.

Resistance levels and technical signals: clear positive momentum

From a technical indicator perspective, the 1.1735 area is significant as it coincides with multiple indicators. It includes the 100-hour simple moving average (SMA) and the 50% Fibonacci retracement level of the recent decline from the current high of 1.1808 to 1.1660 on Tuesday night. The price successfully broke through this area, confirming that upward momentum is strong.

The Moving Average Convergence Divergence (MACD) indicator has shown positive signals, with its value turning positive and continuing to rise. This indicates that buying pressure remains supported and is gathering strength. Additionally, the Relative Strength Index (RSI) is at 59, still within the zone supporting further upward adjustment, with room to expand into the overbought territory.

Watch points: resistance and consolidation scenarios

The 61.8% Fibonacci retracement level, located in the mid-1.1700s, will be an important point. If the price can break through these obstacles, it will unlock additional buying pressure and confirm that the current upward momentum is stable and credible.

Conversely, if the price fails to break through these resistances, EUR/USD may consolidate within the current range. This possibility is something traders should monitor closely, as it will tell whether the bullish momentum is sustainable or just a temporary reaction to changing fundamentals.

Viewpoint: Based on supportive technical indicators and a monetary environment indicating upward momentum, it is plausible that EUR/USD will continue to rise in the short term. However, a breakout through these resistances will determine the strength of the trend and set the tone for the pair’s future momentum.