EUR/USD price prediction: Bullish breakout extends rally to new 4-month high
EUR/USD rose to 1.0690 in the European session
The EUR/USD price has surged higher for the third consecutive day in March, breaking out of a three-month consolidation phase. The pair climbed 1.37% yesterday, breaching the critical resistance zone at 1.0530. Today, EUR/USD extended gains, rising 0.6% to trade around 1.0690 in the European session, putting the currency pair up 2.8% for the month and marking a fresh four-month high.
The euro’s strength is largely supported by growing optimism over fiscal stimulus in Europe, particularly in Germany. Market participants are closely watching how swiftly these proposed fiscal changes progress through the German parliament in the coming weeks. The speed of these developments has been notable, reinforcing expectations that Europe may introduce stronger fiscal measures to support economic growth.
EUR/USD price dynamics (Dec 2024 - March 2025). Source: TradingView
U.S. dollar slides to 3-month low fuel EUR/USD upside momentum
EUR/USD’s rally is also being driven by weakness in the U.S. dollar. The U.S. Dollar Index (DXY) has slid to a three-month low of 105.15, reflecting shifting market sentiment towards the Greenback. A key driver behind this decline is a reassessment of President Trump’s tariff agenda. Initially perceived as inflationary and pro-growth, investors now anticipate that these tariffs could slow U.S. economic growth instead. This shift in perception has weighed on the dollar, providing further support for EUR/USD.
With bullish momentum in play, the focus shifts to whether EUR/USD can sustain its rally towards the next key resistance at 1.0750. The 4-hour RSI, in overbought territory, suggests that a short-term pullback could occur if resistance holds. However, if EUR/USD breaks above 1.0750, the next upside target shifts to 1.0800, particularly if upcoming U.S. economic data disappoints.
Overall, EUR/USD is now in a strong uptrend, supported by bullish fundamentals and technical breakouts. Given the U.S. payroll data due on Friday, market participants will closely assess its impact on the dollar. A weaker-than-expected report could accelerate EUR/USD’s climb towards 1.0800, while a strong reading may limit gains or trigger a pullback.
U.S. economic data slowdown and narrowing yield spread have weakened the dollar, lifting EUR/USD. The pair climbed above the 50-day EMA and broke past 1.0460 resistance.
