EUR/USD Re-Tests 1.1630 as Eurozone Stabilizes, Markets Eye Powell Testimony

EUR/USD Eyes Breakout as Eurozone Stabilizes, Fed Powell in Focus

The Euro (EUR) continues to hover near its recent highs against the US Dollar (USD), with EUR/USD retesting the 1.1630 level in early Tuesday trading. This movement comes as fears about deteriorating Eurozone fundamentals subside, aided by falling oil prices and modest improvement in business sentiment.

Eurozone Outlook: Stable But Stagnant

S&P Global Eurozone PMIs released yesterday aligned with forecasts, indicating business confidence has stabilized after recent trade uncertainties.
However, the data still suggests the bloc is experiencing economic stagnation, not strong growth.

Despite the tepid macro backdrop, the euro continues to find support—not from internal strength, but from external factors, particularly a broad-based USD pullback and accumulation of dollar short positions.

Key Market Quote:

“The euro would benefit from a rally in local activity metrics, but they are neither particularly likely nor necessary to push EUR/USD higher here.”

Oil Prices Ease EUR Pressure

The recent decline in global oil prices has helped diminish concerns over the erosion of EUR fundamentals, further reducing downside risks for the common currency.

Technical Outlook and What’s Next for EUR/USD

EUR/USD is attempting to hold above 1.1600, with resistance at 1.1630.
A dovish signal from Fed Chair Jerome Powell in today’s testimony could provide the momentum needed for a decisive breakout.
Absent that, markets may struggle to keep the pair reliably above 1.1600 due to limited bullish conviction and muted Treasury market volatility.