EUR/USD Supported by Trade Surpluses but US Rate Dominance Persists

EUR/USD finds modest support from improving Eurozone trade surpluses, though US interest rate dynamics continue to dominate the pair's trajectory. The euro has benefited from better-than-expected current account data, showing the region's improved external position amid global trade rebalancing. However, the significant yield differential between US Treasuries and European bonds, with the US 10-year yield remaining elevated above 4.5%, continues to attract capital flows toward the dollar. The ECB's relatively dovish stance compared to the Fed's higher-for-longer narrative maintains downward pressure on EUR/USD despite positive European fundamentals. Technical analysis shows the pair consolidating above 1.0500 support, with resistance at 1.0600 proving difficult to overcome. Traders remain focused on upcoming US economic data and any shifts in Fed communication that could alter rate expectations. Until the interest rate differential narrows meaningfully, euro gains are likely to remain limited despite improving European economic fundamentals.