EUR/USD price surges to 6-week high amid resolution between U.S. and Colombia
EUR/USD surged by 0.7%
The EUR/USD pair extended its upward momentum on Monday, reaching a six-week high near 1.0530 in the early American session. Aided by technical support and a weakening US Dollar Index (DXY), the pair now tests a crucial Fibonacci resistance level. This rally raises questions about whether the euro can sustain its gains or face a pullback.
EUR/USD surged by 0.7% today, bringing its year-to-date gains to 1.7%. The move was supported by the 50-day Exponential Moving Average (EMA), which the pair has crossed for the first time since October 2024.
EUR/USD price dynamics (October 2024-January 2025). Source: TradingView.
The US Dollar’s retreat earlier in the day bolstered the EUR/USD as it slipped to near 107.00, reversing its intraday gains. The decline came after news of a temporary resolution to trade tensions between the United States and Colombia. Over the weekend, President Donald Trump had proposed a 25% tariff on Colombian imports, citing the country’s refusal to accept deportees from the US. However, Colombia’s subsequent compliance with the US demands led to the tariffs being placed “on hold,” according to reports from the Associated Press.
EUR/USD price outlook: Markets eye breakout at Fibonacci 0.786% level
Currently EUR/USD is trading at 1.0525 and is challenging the Fibonacci 0.786% retracement level, but the pair’s relative strength index (RSI) remains in bullish territory across the daily and four-hour charts, suggesting continued upside potential. Breaking above the 0.786 retracement level could pave the way for further gains in the coming sessions.
The combination of technical momentum and a weakening U.S. dollar points to a potential breakout for EUR/USD. If the pair clears the 1.0530 resistance, further gains could follow, targeting higher price levels. Conversely, failure to breach this barrier could lead to a short-term correction, though support at the 50-day EMA remains robust.
U.S. President Donald Trump's call for immediate interest rate cuts pressured the U.S. Dollar. This caused EUR/USD to surge 1.8% to a six-week high, breaking above the 1.0460 resistance.
