The Eurodollar Soars Above Key Resistance, as Predicted

In last week’s and this week’s Market Weekly Overview, we urged you to monitor closely the 1.05330 level for #EURUSD, as a breakout through this key level would have meant explosive bull power.

Once again, as we told you so, the analysis was correct. The Euro gained ground following Germany’s newly elected government to revise “debt caps”, which would allow the nation to take onto further debt to lift its crumbling industrial sector from the ground. 

At the same time, the President of the European Commission Ursula Von der Leyen and French President Emmanuel Macron caused a rally in defense stocks all across Europe. The first one advocated for more military spending, which can lift up industrial output, and the second one boldly stated that France is ready to use its nuclear warheads to “protect the whole of Europe against a rising Russian threat”.

At the same time, Germany dismissed rumors of talks going on to relaunch the Nord Stream 2 pipelines. All these recent developments leave many questions, such as what Europe plans to do when the United States pulls out of the Ukraine crisis. Also, additional tariffs on European goods could quickly cool off this newfound bullish sentiment. The ECB likelihood to cut rates today also adds weaker readings for the EUR. All of this suggests, that fundamentals are still at risk of a bearish plunge.

In any case, as the pair roams at the same levels of November 2024, the technical outlook is now bullish. You can now use a trend-following strategy, aimed at long positions.

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