The EUR/USD currency pair is trading positively above the 1.0300 level as the European session unfolds. The immediate technical outlook suggests a reduction in selling pressure, contributing to its upward movement. As the new trading week begins, the US dollar is facing headwinds, enabling EUR/USD to sustain its gains from the previous week.
With U.S. stock and bond markets closed for the Martin Luther King Jr. Day holiday, market participants are closely monitoring potential remarks from former President Donald Trump regarding his policies on tariffs and U.S.-China relations. Any reluctance from Trump to express aggressive tariff strategies or if he adopts a more diplomatic stance could adversely affect the USD’s strength against other currencies.
Over the weekend, Trump commented on his communication with Chinese President Xi Jinping, expressing optimism about collaboratively addressing various issues. Although these remarks may not result in an immediate market reaction, the impact will likely become clearer when US markets resume, as investors assess how these developments may influence the USD’s trajectory in the near term.
From a technical perspective, EUR/USD has managed to maintain a position above the Fibonacci 23.6% retracement level from the recent downtrend between December and mid-January. The Relative Strength Index (RSI) on the 4-hour chart is nearing the 60 mark, indicating a buildup of bullish momentum.
On the resistance front, the 100-period Simple Moving Average (SMA) at 1.0325 is currently the first hurdle. Should the pair successfully breach this level and establish it as a support area, the next targets for potential upward movement could be seen around the 1.0390 – 1.0400 range, which coincides with the Fibonacci 50% retracement level and the 200-period SMA. Conversely, critical support is identified in the 1.0290 – 1.0300 area, with additional support levels at 1.0250 and 1.0200.
