EURUSD Near 10-Month Highs

Despite weaker growth, lower interest rates, and softer year-on-year inflation, the euro remains relatively strong against the US dollar, holding at elevated levels not seen for several years prior to recent months, broadly between 1.14 and 1.15. The current exchange rate around 1.1740 reinforces this strength.

This resilience may reflect expectations that the European Central Bank will raise rates—fully priced between July and August based on 1-month ESTR futures—while the Federal Reserve is expected to remain on hold. Another supporting factor is the balance of trade, which remains positive for the eurozone and structurally negative for the United States.

EURUSD has effectively traded within a broad range between 1.15 and 1.18 for nearly a year, since June 2025. Notably, the US dollar’s traditional safe-haven role was not strongly evident during March, although the pair did move from the upper to the lower end of this range during that period.

Extended range-bound behavior is not unusual for EURUSD. A similar pattern was observed between November 2023 and November 2024, when the pair traded approximately between 1.0650 and 1.1050. More broadly, the USD tends to weaken when equity markets rally decisively—or conversely, equity strength may reflect USD depreciation, with a lag.

Implied volatility remains low, consistent with a major FX pair, at 5.97% on the 1-month tenor and 6% on the 3-month tenor. For context, this is the EURUSD equivalent of the VIX for the S&P 500 (currently 20.70).

TECHNICAL ANALYSIS

Price is once again testing the upper end of the range near 1.18, in line with the strong rally in equities. The 50-period moving average remains largely flat, with price now trading above it. A weak bullish trendline was also broken to the upside in early March.

Direction remains uncertain. As long as the pair stays within this range, the base case remains continued oscillation between support and resistance. This suggests a potential move back toward the 1.15 area.

On the 1-hour chart, initial support levels are located at 1.1720 and 1.1675, with a short-term upward trendline currently near 1.17—an area to monitor closely in the near term.

On the upside, resistance is seen at 1.1775, followed by 1.18. At current levels, a move toward the upper boundary may present short opportunities, with tight risk management.