In early trading today, the euro advanced beyond the 1.3000 level against the US dollar — a threshold not seen since February 2022.
This week, the EUR/USD exchange rate has surpassed the peak levels recorded in both 2023 and 2024.
What’s Driving the EUR/USD Rally?
Amid ongoing developments around the introduction and suspension of tariffs between the United States and Europe, a key driver has emerged: the accelerated sell-off of US government bonds.
Reuters reports a notable decline in demand for long-term US Treasuries, with yields on 10-year bonds surging from 3.9% at the start of the week to approximately 4.4% — the sharpest rise in yields since 2001. Analysts suggest this could be a strategic response by foreign creditors to recent White House sanctions, compounded by growing concerns over the strength of the US economy. Talk of a possible recession is gaining traction in the media, further fuelling investor caution.
As a result, the dollar is losing ground against several major currencies — including the euro, Swiss franc, and Japanese yen.
EUR/USD Technical Outlook
The price action remains confined within a rising channel (highlighted in blue), which has shown clear respect for its upper and lower boundaries, as well as the midline — all marked accordingly on the chart.
With bullish momentum pushing the pair towards the channel’s upper edge, a near-term pullback cannot be ruled out. The 1.11 area, a previous resistance level, may serve as a potential support if a correction unfolds.
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