Dollar Breaks Out as EUR/USD Hits Decade-Low Oversold Conditions

The US dollar has broken out of its range-bound pattern, reaching fresh yearly highs and testing levels not seen since April 2025. This bullish trend in the USD is a significant development, especially considering the recent moves in interest rates and market expectations around the Federal Open Market Committee (FOMC).

However, the EUR/USD pair has been experiencing extreme oversold conditions on its daily chart, with an RSI reading of 20.28, its lowest level since March 2015. This raises concerns about potential mean reversion setups or even a major macro stress event.

The USD/JPY pair, which had previously driven USD strength through the carry trade, has been relatively calm this week, with buyers stepping in at key levels around 156.68 and 157.22. Nevertheless, the question remains where resistance will be for this pair, as it approaches its previous high of 159.00.