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A leading technical analyst says the Euro's run higher against the Dollar is due a pause, and the exchange rate's recent 7-day rally has reached a critical juncture.

"The EUR/USD recovery has reached the top of the 14 month down channel at 1.1182. Above the downtrend lies the 1.1240 recent high. This remains the break up point to the 200 week ma at 1.1346. This is critical from a longer term perspective," says Karen Jones, Team Head of FICC Technical Analysis Research at Commerzbank.

The Euro-to-Dollar exchange rate has been rising since February 21 when it turned a corner down at 1.0784, seven successive days of gains have seen the Euro appreciate in purchasing power back to a high of 1.1184 on Monday, March 03.

The exchange rate has however since pared back some of those advances and now sits in the 1.1120 area.

Jones says a break above the 200 week moving average at 1.1346 could open the door for a rally that tests a target at the 12 year downtrend at 1.1950.

However, for the time being, "we would allow for some near term profit taking and would allow for a minor retracement to 1.1095/30 ahead of further recovery," says Jones.

The Euro exchange rate complex appears to have benefited from a significant liquidation in global stock market holdings in the final week of February, with the proceeds finding their way back into Euros.

Record-low Eurozone interest rates - courtesy of years of European Central Bank easing - have made it exceptionally cheap to borrow in Euros to fund forays into higher-risk investments, such a stocks.

When stocks holdings are sold, the Euro would therefore be a natural beneficiary.

Meanwhile, a rising expectation for central banks to cut interest rates to hit a coronavirus-hit global economy appears to have further undermined the U.S. Dollar.

Markets believe that the ECB has little room to cut interest rates, while the U.S. Federal Reserve can deliver significant cuts with markets now pricing in a sizeable 100 basis points of cuts to be delivered over the course of 2020. This differential in expectation is weighing on the Dollar and benefiting the Euro.

"In our view, investors may have maintained long positions on the euro, as the ECB is expected to cut by the smallest percentage, and perhaps due to recent reports that Germany’s finance ministry is seriously considering to boost fiscal spending, due to growing pressure to support the nation’s sluggish economy, something that will lessen the need for aggressive easing by the ECB," says Charalambos Pissouros, Senior Market Analyst at JFD Group.