Noor Trends News, Technical Analysis, Educational Tools and Recommendations
The Euro (EUR) is experiencing a surge in value against the US Dollar (USD), driven by a confluence of factors, including anticipated fiscal policy changes in Germany. Recent developments have prompted financial analysts at Rabobank to revise their long-term EUR/USD forecast, now targeting 1.12 within a 12-month timeframe. This upward revision signifies a significant shift in expectations, with the previously forecasted parity level of 1.00 being removed from their projections.
The catalyst for this renewed optimism stems from the proposed plans of Germany’s expected coalition partners to relax the country’s debt rules. This move, aimed at boosting defense spending and supporting infrastructure, is being hailed by some as a pivotal moment for the German economy. Rabobank suggests that this potential large-scale fiscal injection weakens the argument that Germany requires a weak exchange rate to address its structural economic issues. Consequently, this policy shift has bolstered expectations for the Euro across the board.
However, the path to 1.12 is not expected to be linear. Analysts anticipate potential volatility in the short term, with a risk of the EUR/USD pair retracing to 1.05 within the next one to three months. This potential pullback would represent a temporary correction within the broader bullish trend.
Currently, the EUR/USD pair is demonstrating strong upward momentum, holding gains and trading near the 1.0870 area, marking fresh highs since November 2024. This bullish momentum is supported by several technical indicators. The 20-day and 100-day Simple Moving Averages (SMAs) are nearing a bullish crossover, a development that could further solidify the upward trend. Additionally, the Moving Average Convergence Divergence (MACD) is displaying rising green bars, reinforcing the bullish outlook.
Despite the strong buying pressure, the Relative Strength Index (RSI) is indicating overbought conditions, suggesting a potential for a near-term correction. On the technical front, immediate resistance is observed near the 1.0900 zone, with a break above this level potentially paving the way for further gains towards 1.0950. Conversely, immediate support lies around 1.0800, followed by 1.0700, and the convergence of the 20 and 100-day SMAs near 1.0500. A pullback towards these support levels could signal a technical correction before a renewed bullish attempt.
