**EUR/USD Price Forecast: Dollar Weakness Pushes Euro Toward 1.1800**
*By: TradingNews.com Analyst Team*
The euro (EUR) continued its upward momentum against the US dollar (USD) this week, with the EUR/USD pair rallying toward the psychologically significant 1.1800 level. Persistent dollar weakness and improving sentiment for the single currency have combined to drive the pair to fresh multi-month highs, with market participants closely watching the next moves from both central banks and key economic data releases.
In this comprehensive analysis, we dissect the fundamental and technical drivers behind the latest EUR/USD rally, monitor critical support and resistance levels, and outline what traders should watch for as the euro attempts to solidify gains above the 1.1800 threshold.
## Dollar Weakness as a Key Driver
The most prominent factor behind the move higher in EUR/USD has been sustained dollar softness. Several interrelated elements have contributed to the dollar’s retreat in recent weeks:
– **Soft US Economic Data**: Recent economic indicators from the United States have surprised to the downside in areas such as jobs growth and consumer confidence. Slowing momentum has convinced investors that the Federal Reserve (Fed) may be more cautious in its approach to tightening monetary policy.
– **Shifting Fed Policy Expectations**: Markets have moderated their expectations for further Fed rate hikes, with some analysts even suggesting a potential pause or earlier-than-expected pivot. Fed policymakers have expressed concern over mounting risks to growth, reinforcing the perception of a less hawkish stance.
– **Global Risk Appetite**: Improved global risk sentiment has undermined the greenback’s safe-haven appeal. Easing geopolitical tensions and signs of economic recovery in Europe and parts of Asia have spurred investors to rotate into riskier assets, hurting the dollar.
The convergence of these forces has produced a generalized wave of selling against the dollar, with EUR/USD one of the clearest beneficiaries.
## Strengthening Euro Fundamentals
While dollar dynamics are crucial, the euro’s underlying fundamentals have also improved recently, supporting its advance:
– **Eurozone Economic Stabilization**: Key activity indicators suggest the eurozone economy is stabilizing after a period of lackluster growth. Recent Purchasing Managers’ Index (PMI) readings have been stronger than forecast, bolstering confidence in the bloc’s recovery prospects.
– **Inflation Trends**: Although inflation remains above the European Central Bank’s (ECB) target, there are signs it is moderating in a controlled fashion. This has allowed the ECB to signal a gradual approach to policy normalization rather than emergency tightening.
– **ECB Policy Path**: The ECB has maintained a more hawkish tone compared to other major central banks, highlighting a commitment to combating lingering inflation pressures while carefully managing growth risks.
– **Political Stability in Key Eurozone Economies**: Recent elections in major EU economies have passed without significant surprise, removing uncertainty and stabilizing sentiment toward the euro.
These building blocks for renewed euro strength have given traders and investors additional confidence to bid the currency higher.
## Technical Analysis: Eyeing 1.1800
From a technical perspective, the EUR/USD pair’s approach toward 1.1800 is significant for multiple reasons:
**Key Technical Levels**
– *Immediate Resistance*: 1.1800 serves as a key psychological and technical barrier for the pair. It marks the upper end of recent consolidation and represents a zone of prior selling interest.
– *Further Resistance*: Above 1.1800, the next upside target sits near 1.1850, followed by the 1.1900 round figure. Breaks above these levels could prompt a more extended rally, especially if supplemented by favorable macro catalysts.
– *Immediate Support*: On the downside, initial support lies at 1.1750, followed by the former resistance zone around 1.1700. These areas may attract buying interest should the pair experience a near-term pullback.
**Trend Structure and Momentum
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