Euro Gains as Ceasefire Boosts Risk Sentiment, Lagarde’s Comments Add Support

 Key Takeaways:

*The euro’s strength remains solid as the market tilts toward risk-on sentiment.

*The ECB chief stated that the eurozone labour market, as well as wage growth, remain healthy, fueling the euro’s strength.

Market Summary:

The euro advanced in the latest session, outperforming several peers as shifting market sentiment dented demand for traditional safe-haven currencies. The move followed a surprise announcement from former U.S. President Donald Trump, who claimed a ceasefire agreement between Israel and Iran had been reached—easing geopolitical tensions and prompting a broad risk-on rebound.

Safe-haven currencies like the U.S. dollar, Japanese yen, and Swiss franc came under pressure, with the greenback recording notable losses. In contrast, the euro held firm and gained ground against risk-sensitive currencies such as the Australian dollar and New Zealand dollar, as well as the yen.

Eurozone Data Misses, But Lagarde Strikes Upbeat Tone

While the latest Eurozone PMI figures came in below expectations, capping some of the euro’s upside, dovish concerns were offset by a positive tone from ECB President Christine Lagarde, who highlighted a resilient labor market and rising real incomes, pointing to underlying strength in the Eurozone economy.

Outlook:
The euro’s performance will hinge on the durability of the ceasefire and ongoing geopolitical developments. Any breach of the truce could reignite safe-haven flows, weighing on the single currency. Domestically, traders will be watching for follow-through from ECB officials to gauge the likelihood of a dovish or hawkish policy path in the near term.

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Technical Analysis 

EURAUD, H4

The euro’s strength against the Australian dollar has been notable, with EUR/AUD climbing more than 2% from its June low, firmly supported by bullish momentum within its established uptrend channel. The recent rejection at the key psychological resistance of 1.8000 presents a critical juncture for the pair. A convincing breakout above this level would serve as a strong bullish confirmation, potentially opening the path toward higher resistance zones near 1.8100–1.8200.

Technical indicators reinforce the current upward bias. The RSI, while hovering near overbought territory, suggests sustained buying pressure rather than immediate exhaustion, as momentum can persist in overbought conditions during strong trends. Meanwhile, the MACD remains elevated, further validating the pair’s bullish momentum in recent sessions.

Should EUR/AUD successfully clear the 1.8000 hurdle, the next leg of the uptrend could accelerate, particularly if supported by favorable Eurozone economic data or a continuation of risk-on flows. However, if the resistance continues to hold, a short-term pullback toward support near 1.7830 may unfold before buyers re-emerge, keeping the broader uptrend intact.

Resistance levels: 1.8000, 1.8260

Support levels: 1.7730, 1.7480