EUR/USD Hits 1.1641 as Dollar Slumps—Is a Breakout Toward 1.17422 Next?
During Monday’s European session, the EUR/USD pair climbed to an intra-day high of 1.1641, staying well bid around the 1.1622 level...
Quick overview
- The EUR/USD pair rose to an intra-day high of 1.1641, primarily due to the U.S. dollar's underperformance amid tariff concerns.
- Eurozone inflation data for December showed a softer-than-expected rise of 1.9%, but core inflation remained steady at 2.3%.
- Technical analysis indicates a bearish bias with the 50-period MA below the 200-period MA, while RSI shows mild bullish divergence.
- Traders should watch for breakout confirmation above 1.16608 and the impact of upcoming U.S. macro data on dollar strength.
During Monday’s European session, the EUR/USD pair climbed to an intra-day high of 1.1641, staying well bid around the 1.1622 level. The move wasn’t driven by Euro strength alone—it was the U.S. dollar’s sharp underperformance that gave the Euro its lift. The dollar was the worst-performing major currency, weighed down by renewed concerns over potential tariff threats and a quiet U.S. trading day due to Martin Luther King Jr. Day.
Meanwhile, Eurozone inflation data for December came in softer than expected. The Harmonised Index of Consumer Prices (HICP) rose 1.9% year-on-year, below both the earlier estimate of 2% and November’s 2.1%. However, Core HICP, which strips out food and energy, held steady at 2.3%, suggesting underlying price pressures remain.
Despite the inflation miss, the Euro stayed resilient. Traders seem more focused on the weaker dollar narrative and geopolitical risks than on the inflation dip.
EUR/USD Technical Setup: Channel and RSI Divergence
From a charting perspective, EUR/USD is stabilizing within a descending channel, respecting lower highs and lows since mid-November. The pair is currently trading near 1.16409, with key resistance at 1.17422 and support at 1.14913.
• 50-period MA remains below the 200-period MA, signaling bearish bias.
• RSI at 54.78 shows mild bullish divergence, hinting at a possible reversal.
• Candlestick patterns show indecision, with spinning tops and Doji formations near 1.1622.
A breakout above 1.16608 could open the door to 1.16981, while a drop below 1.16222 may expose 1.15802.
What Traders Should Watch This Week
With the Eurozone calendar quiet, attention shifts to Thursday’s U.S. GDP and PCE Price Index—key data that could shake up the dollar and influence EUR/USD’s next move.
Here’s what to monitor:
• Breakout confirmation above 1.16608
• Volume surge to validate bullish momentum
• U.S. macro data impact on dollar strength
If bullish momentum builds, EUR/USD could retest 1.17422. Otherwise, downside risk remains toward 1.15221.
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