Bybit x FXStreet FX Report: EUR/USD hits 1.18 as defense spending and dollar uncertainty fuel rally

Key Highlights:

• EUR/USD has surged 13.5% since early March, reaching its highest level since September 2021

• Military investment momentum in Germany and across the EU is generating fresh capital inflows

• NATO-aligned budgets could lift EU defense spending to 5% of GDP by 2029

• US tariff uncertainty is weakening demand for the dollar globally

• EUR is gaining despite a lower ECB interest rate (2%) versus the Fed funding rate (4.5%)

• RSI on the weekly chart has reached its highest level (74) since 2018

• Key resistance levels are 1.19, 1.20 and 1.255 if momentum continues

Introduction: EUR becomes strongest major FX on military and macro drivers

The euro (EUR) has emerged as the top-performing major currency in recent months, driven by a unique mix of European defense spending and global dollar weakness. While the US economy shows signs of slowing, Europe is benefiting from a fresh investment cycle — centered on national security, NATO commitments and fiscal expansion.

EUR/USD is now trading near 1.18, its highest level since September 2021, marking a 13.5% gain since early March. This is a notable move for a major currency pair, for which such swings are rare outside of extreme environments — and are often amplified through leverage.