EURUSD strengthens amid German economic initiatives

The EURUSD rate is rising, with buyers poised to test the 1.0655 resistance level. Find out more in our analysis for 5 March 2025.

EURUSD forecast: key trading points

• The German government plans to revise borrowing rules
• Expectations of growth in the European economy will rise if defence spending increases further
• EURUSD forecast for 5 March 2025: 1.0705

Fundamental analysis

The EURUSD rate continues to strengthen after Tuesday’s surge, driven by the news that the parties forming the new German government agreed to create a 530.95 billion USD infrastructure fund and revise borrowing rules. These measures may lead to a shift in the budget policy, focusing on modernising the military and stimulating economic growth.

Investors perceived these moves as an incentive to further strengthen the EURUSD pair as easing debt restrictions could give the German economy an additional boost. Furthermore, any announcements about increased defence spending will heighten expectations for growth in the European economy, which will also help the euro strengthen.

EURUSD technical analysis

The EURUSD rate continues to move within an ascending channel. Buyers are testing the nearest resistance level at 1.0635. The EURUSD forecast for today expects the price to pull back to the channel’s lower boundary as part of a correction and test the 1.0595 level before resuming growth to 1.0705. Technical indicators support the bullish trend, with the Moving Averages signalling the predominance of buyers and the Stochastic Oscillator forming a signal for an upward rebound from the support level.

Summary

Easing borrowing restrictions and increased budget spending in Germany are strengthening the euro, creating conditions for further growth in the EURUSD rate. However, a short-term correction before a movement to 1.0705 is possible.