- EUR/USD climbed to new highs near 1.0880.
- The ECB Accounts left the door open to rate cuts.
- Markets’ attention now shifts to US NFP release.
Yet another significant decline in the US Dollar (USD) spurred a robust upward movement in EUR/USD, this time revisiting the 1.0870-1.0880 band on Thursday, an area coincident with the transitory 100-day SMA.
Meanwhile, the movement in the pair was accompanied by vacillating developments in US yields across various maturity periods, while German 10-year bund yields added to Wednesday’s retracement against the backdrop of an unchanged monetary policy framework.
On the latter, both the Federal Reserve (Fed) and the European Central Bank (ECB) are anticipated to initiate easing cycles, potentially commencing in June. However, the pace of subsequent interest rate reductions may vary, potentially leading to differing strategies between the two central banks. Nonetheless, it is expected that the ECB will not significantly lag behind the Fed.
Around the Fed, Chicago Federal Reserve Bank President Austan Goolsbee remarked on Thursday that the most significant obstacle hindering the bank’s efforts to restore inflation to its 2% target rate is the enduring prevalence of substantial price hikes within the housing services sector.
According to the FedWatch Tool provided by CME Group, the probability of a rate cut in June remained around 61%.
Regarding the ECB, the Accounts from its March 6-7 meeting unveiled a rising sense of confidence among policymakers regarding the trajectory of inflation towards their 2% target. This strengthened the case for implementing interest rate cuts.
Looking forward, the relatively subdued fundamentals of the eurozone, coupled with the increasing likelihood of a "soft landing" for the US economy, reinforce expectations of a stronger Dollar in the medium term, particularly as both the ECB and the Fed may introduce easing measures nearly simultaneously. In such a scenario, EUR/USD could experience a more pronounced decline, initially targeting its year-to-date low around 1.0700 before potentially revisiting the lows observed in late October 2023 or early November below 1.0500.
EUR/USD daily chart
EUR/USD short-term technical outlook
On the upside, EUR/USD is projected to encounter initial resistance at March high of 1.0981 (March 8), seconded by the weekly top of 1.0998 (January 11), and the psychological barrier of 1.1000. Further gains from here might lead to a December 2023 peak of 1.1139 (December 28).
On the downside, another test of the April low of 1.0724 (April 2), as well as the 2024 low of 1.0694 (February 14), is not ruled out. The low for November 2023 is 1.0516 (November 1), followed by the weekly low of 1.0495 (October 13, 2023), the 2023 bottom of 1.0448 (October 3), and the round milestone of 1.0400.
The 4-hour chart shows a significant rebound from recent lows around 1.0720. The initial level of resistance is 1.0876, prior to 1.0942. In the other direction, the next obvious downward barrier appears to be 1.0724, followed by 1.0694 and 1.0656. The Moving Average Convergence Divergence (MACD) rose to the positive territory, while the Relative Strength Index (RSI) looked stable around 70.
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
Editors’ Picks
EUR/USD drops below 1.1400 after Germany and EU PMI data
EUR/USD struggles to hold its ground and trades below 1.1400 in the European session on Wednesday. PMI data from Germany and the Eurozone showed that the business activity in the service sector contracted in April. Markets await comments from central bankers and US PMI data.
GBP/USD stays weak near 1.3300 after disappointing UK data
GBP/USD stays under bearish pressure near 1.3300 in the European session on Wednesday. Pound Sterling struggles to find demand following the weaker-than-forecast April PMI data from the UK. BoE Governor Bailey will speak later in the day and the US economic calendar will feature PMI reports.
Gold price takes it on the chin after Trump softens tone on trade and Fed
Gold price is undergoing some profit-taking and sees selling pressure on Wednesday towards $3,300 at the time of writing. The profit taking picked up on comments from United States President Donald Trump, who did a 180-degree turn on his stance on China and the Federal Reserve (Fed). After the closing bell, Tesla’s (TSLA) Chief Executive Officer Elon Musk said he will reduce his role at the Department of Government Efficiency.
Dogecoin lead double-digit gains across meme coins, with Shiba Inu, PEPE and BONK skyrocketing to new monthly highs
Top meme coins Dogecoin, Shiba Inu, PEPE and BONK lead the meme coin sector with double-digit gains on Wednesday following the crypto market recovery.
Five fundamentals for the week: Traders confront the trade war, important surveys, key Fed speech Premium
Will the US strike a trade deal with Japan? That would be positive progress. However, recent developments are not that positive, and there's only one certainty: headlines will dominate markets. Fresh US economic data is also of interest.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.