Bullish Surge: EUR/USD Stages Sharp Technical Rally as Dollar Weakens Further

January 26, 2026

The EUR/USD pair extended its impressive upward momentum today, climbing toward multi-month highs near 1.1900 in a clear technical rally fueled by persistent US dollar softness and easing geopolitical trade concerns across the Atlantic.

Momentum Builds: Pair Breaks Key Resistance Levels

The euro advanced sharply against the greenback, pushing past the significant 1.1805 barrier that had capped gains in recent sessions. Traders watched the pair test levels around 1.1880 to 1.1897 during early trading, marking its strongest performance in months and approaching the psychologically important 1.1900 zone.

Technical analysts noted the rally built on strong bullish signals, with the pair maintaining upward pressure on hourly and daily charts. The break above prior resistance confirmed a local uptrend, drawing in momentum traders and short covering from bearish positions established earlier in the month.

Dollar Under Pressure: Multiple Factors Weighing In

Broad-based dollar weakness provided the primary catalyst, as the greenback retreated amid mixed economic signals and shifting expectations around US policy direction. Recent developments, including the apparent removal of immediate tariff threats between the US and Europe, helped reduce safe-haven demand for the dollar.

Market participants pointed to FOMO (fear of missing out) buying in the euro as the pair surged, overriding traditional fundamental anchors in some analyses. While unpredictable US policy elements linger, the current environment favored risk-on flows into the euro.

Mixed Data and Outlook: Caution Amid Optimism

Eurozone indicators showed a mixed picture, with some business sentiment readings disappointing and contributing to brief pullbacks from session highs. German IFO data failed to impress, leading to moderate retracements that saw the pair ease toward 1.1855 at points.

Despite these hiccups, the overall weekly tone remained positive for EUR/USD bulls. Forecasts highlighted potential continuation toward 1.2000 if momentum holds, though longer-term projections from some houses suggested eventual retreats as economic divergences reassert themselves.

Trader Sentiment: Bullish Bias Prevails for Now

Retail and institutional sentiment tilted firmly bullish in the short term, with many eyeing further gains unless significant dollar-supportive data emerges. Key upcoming releases, including eurozone inflation figures and US economic prints, will likely influence whether the rally sustains or faces renewed selling pressure.

The pair's ability to hold above freshly broken resistance levels will be crucial in the sessions ahead. For now, the technical rally has captured attention across forex desks, underscoring the euro's resilience against a backdrop of dollar challenges.

As January draws to a close, this surge adds excitement to currency markets, with traders positioning for what could be a hot finish to the month and potential volatility in the weeks ahead.