EURUSD Daily Forecast EUR/USD Climbs Toward Key Resistance as Softer Dollar and Geopolitical Optimism Fuel Euro Demand The euro’s latest advance against the US dollar reflects a market that is gradually losing confidence in the Greenback’s defensive appeal. EUR/USD pushed toward the 1.1780 area on Friday, extending its weekly recovery as investors reacted to a softer tone in US economic data and growing optimism surrounding diplomatic negotiations between Washington and Tehran. The move higher has not been explosive, but it carries the characteristics of a market steadily rebuilding bullish conviction after weeks of uncertainty tied to geopolitical tensions and shifting Federal Reserve expectations. Friday’s labor market figures reinforced that cautious mood rather than delivering a decisive policy signal. Nonfarm Payrolls exceeded expectations with a 115,000 increase in April, yet the broader picture still pointed to moderating employment momentum compared with previous months. Wage growth also failed to accelerate meaningfully, while the unemployment rate held steady. Collectively, the data did little to challenge expectations that the Federal Reserve will maintain a patient stance while monitoring inflation risks linked to elevated energy prices and instability in the Middle East. At the same time, easing fears of an immediate escalation between the United States and Iran have reduced demand for traditional safe-haven assets. Markets continue to price in the possibility of a diplomatic breakthrough despite intermittent clashes near the Strait of Hormuz. President Donald Trump’s attempt to downplay the latest incidents helped calm investor nerves, encouraging broader risk appetite and pressuring the US dollar back toward pre-conflict levels. Technically, EUR/USD is beginning to display a more constructive structure after successfully holding above medium-term support zones during April’s pullback. The pair is now trading firmly above its key moving averages on the daily chart, while momentum indicators continue to lean modestly positive. The RSI remains above the neutral threshold without approaching overbought territory, suggesting buyers still have room to extend the rally before momentum becomes stretched. Meanwhile, MACD histogram bars are stabilizing after earlier weakness, reflecting improving bullish momentum rather than aggressive acceleration. Price action around the 1.1770-1.1780 region is particularly important because it aligns with a previous congestion area that repeatedly capped advances earlier in the year. A sustained break above this zone could expose the next resistance cluster near 1.1835, followed by the psychological 1.1900 barrier. Beyond that, attention would likely shift toward the January highs near 1.2000, especially if dollar sentiment continues deteriorating alongside softer Treasury yields. On the downside, immediate support is emerging around 1.1700, where short-term moving averages and previous breakout levels are beginning to converge. A deeper retreat toward the 1.1660-1.1670 area could still preserve the broader bullish structure, though a decisive break below that region would weaken momentum significantly and reopen the path toward 1.1600. The broader market environment remains heavily influenced by geopolitical headlines and evolving central bank expectations. Rising oil prices continue to complicate the inflation outlook globally, limiting how aggressively traders are willing to price future Fed rate cuts. Nevertheless, the dollar’s inability to attract sustained safe-haven demand despite ongoing Middle East tensions suggests investor positioning is becoming increasingly fragile. EUR/USD appears to be benefiting from that shift, with buyers gradually regaining control as sentiment turns less defensive and technical conditions continue improving. Trading conditions remain vulnerable to reversals if geopolitical negotiations deteriorate or US inflation data surprises to the upside. Any rebound in Treasury yields could slow the euro’s momentum and encourage profit taking near current levels. Still, the pair’s ability to maintain higher lows since mid-April indicates that demand remains intact, even as traders continue navigating a market shaped by politics, interest rates, and optimism.
