EUR/USD Price Forecast: Challenging fresh multi-year highs

EUR/USD Current price: 1.1914

• Fresh US President Donald Trump’s tariff threats put additional pressure on the US Dollar.
• The European Union announced a major trade deal with India following a similar one with South America.
• EUR/USD keeps grinding north and aims to test the 1.2000 psychological mark.

The EUR/USD pair keeps grinding north on Tuesday, peaking so far at 1.1932, its highest since mid-2021. The latest US Dollar (USD) selling bout came as United States (US) President Donald Trump decided to escalate trade tensions, this time with South Korea. Trump announced tariffs will increase from 15% to 25% on multiple goods, claiming the South Korean legislature's failure to approve the deal reached with President Lee Jae Myung.

Meanwhile, the President of the European Commission, Ursula von der Leyen, announced a major trade deal with India after two decades of on-and-off negotiations. The agreement comes after the European Union (EU) signed a similar pact with the South American bloc Mercosur. It’s clear that the European Union is working harder to hedge against US tariff threats, a positive factor for the EUR.

Data-wise, the European macroeconomic calendar had nothing to offer. Across the pond, the US just published the ADP Employment Change 4-week average report, which showed that, for the four weeks ending January 3, US private employers added an average of 7,750 jobs per week.

European Central Bank (ECB) President Christine Lagarde and US President Donald Trump are scheduled to speak in the American afternoon, and their comments could impact EUR/USD.

EUR/USD short-term technical outlook

In the 4-hour chart, EUR/USD is bullish despite technical indicators showing overbought conditions. The pair is trading above its moving averages, with the 20-period Simple Moving Average (SMA) rising above the 100 and 200 SMAs, underscoring a firm bullish bias. Meanwhile, the Relative Strength Index (RSI) indicator aims north at around 74 without signs of upward exhaustion, while the Momentum indicator also expands higher, in line with the continued buying pressure.

In the daily chart, EUR/USD is also poised to extend its advance. The 20-day SMA climbs above the 100- and 200-day ones, reinforcing a bullish structure. All three SMAs slope higher, with price holding above them. The 20-day SMA at 1.1709 stands as critical dynamic support. Finally, the Momentum indicator accelerates in positive territory, while the RSI rises at around 74, entering overbought territory that could precede consolidation.

(The technical analysis of this story was written with the help of an AI tool.)