EUR/USD Extends Gains as Dollar Slides to Six-Week Lows Ahead of U.S. PPI
EUR/USD Holds the Bid as Dollar Weakness Deepens
EUR/USD continued to firm on Monday, climbing to around 1.1757 as the U.S. Dollar Index slipped to six-week lows near 98.36. Improved risk appetite, renewed hopes for a Middle East ceasefire, and softer U.S. housing data helped pressure the greenback ahead of Tuesday’s key inflation release. For broader dollar context, see DXY context.
The pair remains supported by a constructive technical setup, with price still holding above major moving averages. For retail traders, the main question is whether the dollar’s weakness can continue long enough to push EUR/USD toward the 1.1800 area, or whether upcoming U.S. data will trigger a rebound in the dollar. Recent price action is similar to recent EUR/USD pressure when stronger U.S. data lifted the dollar.
What Is Driving EUR/USD Higher?
Risk sentiment has turned more supportive for the euro
The latest move in EUR/USD was driven primarily by a softer U.S. dollar rather than a clear euro-specific catalyst. Market mood improved as hopes increased for de-escalation in the Iran conflict, while the U.S. Dollar Index fell as investors rotated out of safe-haven positioning. That type of move can also be influenced by broader risk-on conditions, as discussed in liquidity and risk assets.
U.S. housing data added to dollar pressure
U.S. Existing Home Sales dropped to a nine-month low, reinforcing the view that the dollar may struggle if incoming data continues to disappoint. That said, the next major test arrives with U.S. Producer Price Index data, which is expected to reflect early inflation effects from the Iran war and higher energy costs.
Key Levels Traders Are Watching
Resistance near 1.1800 remains the first hurdle
EUR/USD is still trading below the psychologically important 1.1800 level. A break above that zone would likely strengthen the bullish short-term case, especially if U.S. yields and the dollar remain under pressure. Similar bullish follow-through has appeared in EUR/USD buy-the-dip setups when policy expectations favored the pair.
Support sits near 1.1700 and 1.1674
On the downside, support is seen around 1.1700, followed by a broader support cluster near 1.1674 where the 50-, 100-, and 200-day simple moving averages converge. That moving-average cluster is important because it suggests the pair has not yet lost its broader constructive structure.
Why the technical backdrop matters
The daily setup shows EUR/USD staying above the major moving-average cluster, while RSI remains bullish but not overbought. That combination suggests there is still room for further upside, although traders should remain aware that momentum can fade quickly if U.S. data surprises to the upside.
What Could Change the Outlook?
U.S. PPI and Fed speeches are the next major catalysts
Tuesday’s U.S. Producer Price Index release is the biggest scheduled risk event for the pair. The market is watching whether inflation pressures are starting to build from the disruption around the Strait of Hormuz and the broader energy shock. Later in the session, several Federal Reserve speakers could also influence rate-cut expectations and the dollar’s direction. For background on policy messaging, read Fed language guide and FOMC basics.
Geopolitical risks remain a wildcard
The dollar’s recent weakness is tied in part to improved risk sentiment, but that can reverse fast if tensions in the Middle East worsen again. If markets shift back into risk-off mode, the dollar could regain some support and cap EUR/USD upside.
Bottom Line for Traders
EUR/USD remains in a short-term bullish phase, supported by a softer dollar and a favorable technical structure. However, the pair is now close to a key resistance zone, and Tuesday’s U.S. PPI data could decide whether the rally extends or stalls.
For traders using crypto trading, forex trading, or automated trading strategies, this is a market where discipline matters: respect resistance, watch inflation data closely, and avoid chasing price without confirmation. If you want to explore smarter market analysis and execution tools, try the Trade Assistant Bot and the Forex Trading Bot at PlayOnBit. Visit PlayOnBit to get started.