Euro Tags Along as EUR/USD Slides from Resistance Down to Support

Currency Market Movements: USD Weakness and Major Pair Reactions

Two weeks ago, the US Dollar experienced a notable decline, which sparked significant upward moves in both the EUR/USD and GBP/USD pairs. Interestingly, these surges occurred without any major economic catalysts emerging from either Europe or the UK. The momentum appeared to stem largely from the USD/JPY pair, which remains approximately 50% higher than its early 2021 value.

This ongoing rally has been fueled by the carry trade and the interest rate gap between the US and Japan. As a result, bullish sentiment has become dominant, with monetary policies in both countries continuing to favor buyers over sellers. Even now, the prevailing market conditions still support this trend, leading to a crowded long position among traders.