Geopolitical uncertainty caps EURUSD’s technical upside

A heated geopolitical environment and another trade standoff on the horizon halted the EURUSD rally. The price has been hovering within a narrow range during today’s early trading—a clear signal of investor indecision. However, the pair is trying to keep its recent gains, balancing near the 1.1720 level.

The technical picture on the daily chart (D1) points to bullish momentum following the previous bearish one. The pair is now trading above the middle Bollinger Band (1.16968) but below the upper one (1.18221), outlining the limits of the current advance. Widening bands also highlight elevated market volatility. The Stochastic Oscillator is generating a faint bullish signal after its %K line (39) crossed above the %D one (27), although both of them remain in the red below the 50 threshold.

The Chaikin Oscillator is singing the same optimistic tune, despite being in the negative zone as well. The technical indicator is pushing from bottom levels, signaling a potential decline in selling pressure and rising appetite for EURUSD purchases. However, this is only a suggestion; no trend reversal is confirmed until the oscillator crosses above the zero line.

From a fundamental standpoint, escalating trade tensions are weighing on the US dollar. The Trump administration’s announcement of 10–25% import tariffs on goods from eight European countries, including Germany and France, has triggered significant capital outflows from American assets. Meanwhile, the euro is still backed by the bloc’s resilient economic data. Nevertheless, the pair’s rally is capped by the region’s domestic budget concerns and upcoming reforms.

Pay attention to the trading plan presented below:

Sell EURUSD. The potential for both the euro to strengthen and the dollar to fall is limited, with current risks already factored into prices. It is better to enter the trade above 1.17100. Set Take profit at 1.16400 and Stop loss at 1.18000.

The forecast is valid from January 21 till January 28, 2026.