EUR/USD: Euro Cracks Through $1.1250 as Dollar Pulls Back on Rating Downgrade Fears

Major currency pair was marching higher early Tuesday, seeking to ride out an upswing for the second day in a row. Quiet days ahead = technical bros making moves.

💪 Euro Extends Gains to $1.1250

• The EURUSD pair was rising for a second straight session Tuesday, cracking the $1.1250 level as the US dollar was getting stripped of its pips in the wake of Moody’s credit downgrade.
• With macro catalysts mostly behind us this week, technical traders are looking to get back in control — and they’re clearly liking the setup for more upside in the euro-dollar.
• A sustained move above $1.1250 could put the euro on track to revisit its April highs near $1.16, as dollar bulls hit pause. But, of course, that’s forex and currencies can change their mood overnight.

📢 Moody’s Downgrade, in a Nutshell

• Friday’s downgrade of the US credit rating to Aa1 from Aaa continues to linger, with currency-trading bros now reassessing the dollar’s strength.
• Although markets initially shrugged off the news (at least in the equity corner), the greenback is starting to show signs of fatigue as the cost of US debt and fiscal imbalances come back into focus.
• A few words on that: the US spent nearly $900 billion just to pay off the interest on its debt last year. Total spending hit $6.75 trillion while total receipts landed at $4.92 trillion. That creates a deficit of $1.83 trillion.

👀 Low-Vol Week = Chart Watchers’ Time

• Well… back to the story. With little on the economic calendar and most major central banks in data-watching mode, currency markets are staring at a technical phase.
• Traders are watching key levels like $1.1275 and $1.1300 for potential resistance. A clean break above could set off more algo buying.
• On the flip side, dollar bulls may regroup around the $1.1100 handle — a critical short-term support — especially if Donald Trump takes to his Truth Social platform for an update on the tariff situation.