Euro holds gains, eyes new highs as Dollar weakens

The euro’s recent rally against the US dollar has gathered momentum in July 2025, with EUR/USD clearing the 1.1650 barrier and advancing past the 1.1720 resistance zone.

The pair reached a high of 1.1829 on 1 July, marking its strongest level this year, before entering a consolidation phase above 1.1750. 

As of July 7, EUR/USD was quoted around 1.1780, having traded in a narrow range amid mixed sentiment and cautious positioning ahead of key US economic data.

On the technical front, the pair remains firmly above both the 100-period and 200-period simple moving averages on the four-hour chart, reflecting a sustained bullish bias.

After testing the 23.6% Fibonacci retracement of the rally from the 1.1453 swing low to the 1.1829 high, EUR/USD found support near 1.1750. Immediate resistance is observed at 1.1795, with a breakout above 1.1830 likely to open the door to 1.1850 and potentially 1.1920 in the coming sessions.

The euro’s strength is underpinned by improving economic indicators in the euro area, particularly in Germany and France. At the same time, the US dollar faces headwinds from a widening budget deficit and persistent inflationary pressures.

The Federal Reserve’s reluctance to tighten policy further has also weighed on the greenback, prompting investors to seek alternatives in euro-denominated assets.

Market participants are closely monitoring the evolving technical structure, with a short-term contracting triangle forming on the four-hour chart. If EUR/USD fails to sustain gains above 1.1795, downside risks could emerge, with support at 1.1750 and 1.1720.

A breach of these levels would expose the pair to a deeper pullback towards 1.1650.

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Elsewhere, GBP/USD has struggled to maintain upward momentum, failing to break above the 1.3800 resistance and entering a period of consolidation. This divergence highlights the euro’s relative outperformance in the current environment.