• The Euro weakened after a 25 basis points rate hike from the ECB.
  • The US dollar is under pressure amid US banking concerns ahead of NFP.
  • EUR/USD dropped towards 1.1000 after Fed and ECB meetings but is still above the 20-day SMA.

The EUR/USD pair declined after Thursday's European Central Bank (ECB) meeting despite a weaker US dollar. The pair dropped below 1.1000 but quickly rebounded above, moving away from the 1.1100 level.

The Euro struggled as European bond yields declined, while the US Dollar weakened despite falling equity prices on Wall Street. The Greenback is under pressure due to lower US yields as markets reassess their expectations for Federal Reserve (Fed) rate cuts in the second half of the year.

As anticipated, the ECB announced a 25 basis point hike in its key interest rates, a departure from the half-point increases in its previous three policy meetings. The central bank also revealed the termination of asset purchase program (APP) reinvestments from July 2023.  Although the ECB did not reintroduce forward guidance, it clarified that further rate hikes are likely. ECB President Lagarde mentioned that some governors believed a 50 basis point hike was appropriate. Market participants expect at least two more 25 basis point rate hikes at the next two meetings.

On Friday, the Eurozone will release Retail Sales data for April. The key event on Friday will be the US official employment report. The positive ADP report on Wednesday did not help the US Dollar. Still, a surprise in the payrolls report could lead to a different outcome, particularly given the recent dollar's performance.

EUR/USD short-term technical outlook 

The slide of the EUR/USD pair on Monday found support above the 20-day Simple Moving Average (SMA) and rebounded above 1.1000. Despite the retreat, the trend remains up and has some momentum. However, a daily close below 1.0960 would signal a deeper correction. A breakout above 1.1100 would clear the way to more gains. 

On the 4-hour chart, technical indicators offer mixed signals, with Momentum and the Relative Strength Index (RSI) flat at midlines. The pair is trading at the 20-period SMA, with a modestly bearish bias in the short term but without much conviction. The Euro needs to reclaim levels above 1.1045 to regain the initiative.

View Live Chart for the EUR/USD

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD treads water just above 1.0400 post-US data

EUR/USD treads water just above 1.0400 post-US data

Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.

EUR/USD News
GBP/USD falls to six-month lows below 1.2550, eyes on US PMI

GBP/USD falls to six-month lows below 1.2550, eyes on US PMI

GBP/USD extends its losses for the third successive session and trades at a fresh fix-month low below 1.2550 on Friday. Disappointing PMI data from the UK weigh on Pound Sterling as investors await US PMI data releases.

GBP/USD News
Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark

Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark

Gold price hits a fresh two-week top during the first half of the European session on Friday, with bulls now looking to build on the momentum further beyond the $2,700 mark. This marks the fifth successive day of a positive move and is fueled by the global flight to safety amid persistent geopolitical tensions stemming from the intensifying Russia-Ukraine war.

Gold News
Geopolitics back on the radar

Geopolitics back on the radar

Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.

Read more
Eurozone PMI sounds the alarm about growth once more

Eurozone PMI sounds the alarm about growth once more

The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Majors

Cryptocurrencies

Signatures