Meanwhile, the euro currency against the US dollar or EUR/USD is climbing higher and trying to cross above the psychological level at 1.2000. Late last month, the EUR/CHF pair rose as high as 1.1932, its most significant value since mid-2021. Strong technical signals are largely responsible for this rallying. At the same time, external economic factors are placing increasing pressure on the US Dollar.
With all its moving averages in an upward orientation, the EUR/USD displays a clear bullish structure. The 20-period Simple Moving Average (SMA) climbing above both the 100 and 200 SMAs signaling strong bullish momentum. All three SMAs are sloped up, with the price regularly finding support above all of them. 20-day SMA, currently at 1.1709, has turned into a key dynamic support level for the currency pair.
The Relative Strength Index (RSI) for the EUR/USD is around 74, placing it in overbought territory. This historically high RSI indicates that a period of consolidation may be due, but recent price action momentum is still very strong. Plus, the Momentum indicator is accelerating in positive territory, which is another sign of continued buying hunger among traders.
The other, countervailing, factor that has driven the recent movement in the EUR/USD is external economic pressures on the US Dollar. And on top of all that, US President Donald Trump’s tariff threats are rocking the markets. They compound other uncertainty, particularly about the U.S.’s future trade relations with South Korea. This increase in overall trade friction has undercut some of the dollar’s overall strength, providing some room for the euro to push up.
Recent employment data from the United States showed that private employers added an average of just 7,750 jobs per week for the four weeks ending January 3, as per the ADP Employment Change report. This is not a good sign for a recovering labor market. Nonetheless, it has stoked fears of dollar weakness, which adds to the bullish trend in EUR/USD.
The European macroeconomic calendar has failed to provide any substantial or noteworthy developments capable of affecting the EUR/USD directly. The lack of any bad news out of Europe opens the door for the euro to rally. This lays a much clearer runway for it to appreciate against the American dollar.
As traders continue to keep their eyes peeled, analysts have indicated that EUR/USD has the potential to continue to push higher towards the 1.2000 level. Most importantly, technical indicators are extremely bullish, providing powerful upward momentum. At the same time, outside pressures on the US dollar paved the way for more crowing by the currency pair.