EUR/USD Tests 1.18 Resistance as Dollar Weakness Supports Rally

EUR/USD is trading near a major resistance level, with markets balancing improving geopolitical sentiment against ongoing inflation concerns and central bank uncertainty.

EUR/USD is being supported by US dollar weakness linked to BOJ intervention risks and possible carry trade unwinds. The pair is now testing the important 1.18 resistance zone. A breakout above this level could push the price toward the 1.1850 - 1.1930 zone, while failure to break higher could trigger a pullback toward the 1.1660 - 1.1630 support. However, inflation concerns and upcoming catalysts like US CPI and non-farm payrolls could increase volatility and challenge the rally.

Bottom line: EUR/USD is approaching a key decision zone. Dollar weakness and improving sentiment are supporting bullish momentum for now, but inflation risks and central bank expectations could quickly shift market direction. Price action around EUR/USD 1.18 will likely determine the next major move.

EUR/USD Daily Chart