EUR/USD price extends four-day rally boosted by optimism in Ukraine
The EUR/USD price has been on a four-day winning streak this week, but the rally is facing major technical hurdles.
After initially dipping to the 2024 low of 1.033 on Wednesday, the pair rebounded sharply, gaining 1% to reach 1.043. However, the 50-day EMA acted as resistance, leading to a pullback to 1.038. In the Asian session on Thursday, EUR/USD advanced another 0.6%, reaching a six-day high of 1.044 before easing slightly to 1.041 in the European session.
Optimism surrounding potential peace progress in Ukraine provides a significant boost to European sentiment, lowering energy costs and potentially driving investment through a recovery plan similar to the Marshall Plan.
However, the persistent threat of tariffs casts uncertainty over the eurozone economy. Businesses and consumers remain wary of potential trade restrictions, which could dampen confidence. As a result, market participants appear to be paring back euro short positions, providing some support to the currency.
EUR/USD price dynamics (November 2024-February 2025). Source: TradingView
Failure to hold above 50-day EMA could trigger EUR/USD bearish outlook
Despite the recent strength, EUR/USD remains challenged by two key technical levels, the 50-day EMA and the next critical resistance at 1.046. RSI readings on both the daily and 4-hour charts suggest the momentum may be strong enough to break through these levels, but confirmation is still needed.
Looking ahead, EUR/USD’s ability to sustain its upward movement will depend on breaking the 1.046 resistance level. If it clears this hurdle, further gains toward 1.05 could materialize. Conversely, failure to hold above the 50-day EMA could see a retest of the 1.038 and 1.033 support zones.
EUR/USD price surged 0.8% yesterday above the 1.0330 resistance level to reach a two-day high. The rally comes ahead of the U.S. Consumer Price Index (CPI) release.
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