The EUR/USD pair extended its rally for the third consecutive day on Thursday, trading near 1.1645 as investors continued selling the U.S. dollar amid renewed concerns about rising trade tensions between Washington and Beijing. The pair’s momentum has been supported by growing optimism about Europe’s political stability and declining confidence in the U.S. dollar’s resilience in the short term. Traders are now awaiting speeches from Federal Reserve and European Central Bank (ECB) officials, including ECB President Christine Lagarde, which could provide critical clues regarding future monetary policy direction.
The greenback’s weakness has been broad-based across major currencies, reflecting investor anxiety over escalating geopolitical friction and uncertainty about the U.S. economic outlook. With Trump’s latest comments signalling a tougher stance on China and Treasury Secretary Scott Bessant’s harsh remarks toward Beijing’s trade delegation, market sentiment has soured. This, combined with slowing inflation and a cooling labour market, has intensified speculation that the Federal Reserve may soon pivot toward a more dovish policy stance, weighing heavily on the dollar.
On the European front, investor sentiment received a moderate boost from France’s political developments. Prime Minister Sébastien Lecornu narrowly survived a no-confidence vote, largely due to the left-wing opposition’s refusal to align with the far right. His recent decision to abandon President Emmanuel Macron’s pension reform plan played a key role in maintaining parliamentary support. While his government still faces significant fiscal challenges, the continuity of leadership has reduced short-term political risk a factor that markets often reward, helping the euro maintain an upward bias.
Across the Atlantic, trade tensions remain the dominant theme. President Donald Trump’s declaration that the U.S. is already “in a trade war with China” rattled global markets, raising fears of renewed economic strain. However, traders are cautiously optimistic ahead of next week’s Trump–Xi summit, hoping for signs of diplomatic thawing. Still, the dollar’s safe-haven appeal has diminished, with investors unwilling to extend long dollar positions until there is clarity on the direction of trade talks.
From a technical perspective, the EUR/USD pair continues to display a constructive structure. After rebounding from 1.1600, the pair now faces resistance at 1.1650, a critical level that has repeatedly capped upward momentum. A clear break above this level could pave the way for further gains toward 1.1750, while sustained support at 1.1600 remains vital for maintaining the bullish bias.
The pair’s position above the 50-day Exponential Moving Average (EMA50) confirms ongoing positive momentum, reinforced by the formation of a double-bottom pattern on the short-term chart often a precursor to trend continuation. Although short-term consolidation may occur due to overbought conditions, the overall sentiment remains bullish as long as the pair trades above the 1.1600–1.1620 zone.
Trade Recommendation
Buy EUR/USD
- Entry Price: 1.1660
- Stop Loss: 1.1600
- Take Profit: 1.1750
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