EUR/USD Rises on Weaker USD, but Key Technical Hurdles Remain

EUR/USD Advances on Greenback Vulnerability, Yet Significant Technical Barriers Remain Intact

EUR/USD continued to show resilience on Tuesday, rising for the second consecutive day and approaching the 1.1300 level. Despite the recent short-term correction, the Euro remains well below its recent highs of 1.1575 against the US Dollar, with significant technical resistance still intact. The pair has found solid support near key moving averages, and the overall market sentiment remains positive, encouraging buying interest in the Euro.

US Dollar Weakness Keeps EUR/USD on the Upside

The recent rally in EUR/USD is primarily attributed to the ongoing vulnerability of the US Dollar, as markets await further news on US trade policies and economic data. While European policymakers remain largely focused on G7 summits, the global market sentiment continues to hinge on US trade negotiations and the outcome of President Donald Trump’s tariff decisions.

Investors are keeping a close eye on potential developments regarding the Trump administration’s tariff proposals, particularly the 90-day deadline on reciprocal tariffs. However, despite some progress in outlining potential trade agreements, uncertainty still weighs on broader market sentiment, limiting the scope for further bullish moves in EUR/USD.

Technical Outlook: Key Resistance Levels Still in Play

Despite the recent gains, EUR/USD remains far from its multi-year highs of 1.1575. The pair continues to face substantial resistance around that level, making it challenging for bulls to break through. Traders will be looking for a solid break above this resistance in order to confirm further upside momentum.

In the near term, EUR/USD is supported by the 1.1200 level, with short-term buyers likely to continue pushing the pair higher, but significant technical hurdles remain in place for a sustained rally.

Focus on US PMI Data

Looking ahead, the market will be focused on the upcoming US Purchasing Managers Index (PMI) data. Thursday’s figures are expected to show a slight decline in the US Manufacturing PMI for May, which is projected to fall to 50.1 from 50.2, while the Services PMI is expected to hold steady at 50.8. The PMI readings could provide further insight into the state of the US economy and influence the trajectory of EUR/USD.

Conclusion: Caution Prevails Amid Trade and Data Uncertainty

As the US continues to navigate fiscal concerns, tariff negotiations, and a potentially slowing economy, EUR/USD remains within a tight range with cautious optimism prevailing. Traders will need to monitor the technical levels closely, as well as the US economic data and trade developments, for further clues on the direction of the pair in the coming sessions.