The EUR/USD currency pair surged to a multi-week peak, surpassing the 1.0450 level on Friday. Traders are now focused on the upcoming preliminary January Manufacturing and Services PMI reports, which are expected to influence market sentiment. The latest technical analysis indicates a solidifying interest from buyers, suggesting that the recent upward trend is likely to persist.
After a day of mixed performance, the pair gained strong momentum, reaching its highest value since December 18 at 1.0470 in early trading. Although a slight pullback occurred, bringing it back to around 1.0450, the prevailing technical indicators still favor a bullish outlook for EUR/USD .
In a related development, comments made by US President Donald Trump during an early morning interview suggested he would prefer to avoid imposing tariffs on China. This statement seemed to enhance market sentiments, leading to diminished demand for the US Dollar. However, remarks made by Trump at the World Economic Forum indicated potential actions regarding the trade deficit with the EU, implying that any increase in tariffs on European goods may weaken the EURO ’s strength.
Market participants are keenly awaiting the preliminary PMI reports for Germany and the Eurozone. As these releases approach, markets are likely to react sharply to the data results, with positive figures expected to bolster the EURO , while weaker outcomes could have the opposite effect.
Additionally, the US side will also release S&P Global PMI data later in the day. Should the Composite PMI fall unexpectedly below the neutral threshold of 50, indicating a slowdown in economic activity, it could lead to increased selling pressure on the US Dollar as traders position themselves ahead of the weekend.
From a technical standpoint, the Relative Strength Index (RSI) on the 4-hour chart indicates that the EUR/USD still has room to rise before reaching overbought territory. Key resistance levels to watch include 1.0500 – 1.0510, with additional targets at 1.0540 and 1.0600. Conversely, if the pair falls below 1.0440, reversing this level, the next support areas may be found around 1.0400 – 1.0390 and 1.0350.
