Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.2100.
- Add a stop-loss at 1.1900.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1900.
- Add a stop-loss at 1.2100.
The EUR/USD exchange rate soared and crossed the important resistance level at 1.2000 for the first time since 2021 as the US Dollar Index crash gained steam. It has jumped by nearly 18% from its lowest level in 2025.
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US Dollar Index Plunge Gains Steam
The EUR/USD exchange rate continued its strong bull run, reaching its highest level in years as the dollar plunged. The index retreated to its lowest level in four years, continuing a trend that started last year.
Its crash accelerated after the US released a weak consumer confidence report. Data compiled by the Conference Board showed that consumer confidence tumbled to the lowest level in more than a decade amid pessimistic views about the economy.
The consumer confidence dropped to 84.5 from an upwardly revised 94.2 in December, and lower than the median estimate of 90.4. A sharp decline in consumer confidence can affect economic growth because their spending is the biggest part of the economy.
Still, analysts believe that consumer confidence will improve in the coming months, helped by the upcoming tax refunds, which will be the highest in years.
The next key EUR/USD news will be the upcoming Federal Reserve interest rate decision, which will come out on Wednesday. Economists polled by Reuters and Polymarket data show that the bank will leave interest rates unchanged between 3.50% and 3.75% in this meeting. Still, the bank’s messaging on the future of interest rates will help to determine its performance.
The EUR/USD pair also jumped as traders focused on the potential US intervention in the recent Japanese yen crash, which may lead to a coordinated intervention to guide the dollar lower.
EUR/USD Technical Analysis
The three-day chart shows that the EUR/USD exchange rate has been in a strong uptrend in the past few months and is now hovering at its highest level in years. It crossed the important resistance level at 1.1805, the upper side of the ascending triangle pattern.
The pair has remained above the 50-day and 100-day Exponential Moving Averages (EMA), while the top oscillators like the Relative Strength Index (RSI) and the MACD have continued rising. It also remains above the Ichimoku cloud indicator.
Therefore, the pair will likely continue rising as bulls target the key resistance level at 1.2100. However, at this point, a pullback to the key support level at 1.1800 is possible amid profit~taking.
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