Daily Price Outlook
During the European trading session, the EUR/USD currency pair gained bullish traction and edged higher, trading above the 1.1050 level.
However, the reason for its upward trend could be attributed to the overall weakness in the US dollar, as well as improving market sentiment in the Eurozone.
Investors are reacting to mixed economic data from both regions, but the recent optimism around the European economy is giving the euro some support.
At the same time, uncertainty over the US Federal Reserve's interest rate path is putting pressure on the dollar, allowing the EUR/USD pair to climb gradually.
Eurozone Retail Sales Growth and Germany's Industrial Sector Struggles Impact Euro Sentiment
On the data front, Eurozone retail sales grew by 2.3% year-over-year in February, outpacing market expectations of 1.8%.
However, retail sales showed slower-than-expected growth on a monthly basis, with a mere 0.3% increase compared to the expected 0.5%.
These figures highlight some resilience in consumer demand but also point to some potential weakness in the broader economic recovery.
Meanwhile, Germany’s industrial sector has taken a step back. The industrial production in Europe's largest economy contracted by 1.3% in February, marking a sharp contrast to the 2% rebound in January.
In the meantime, the year-on-year industrial output plunged 4%, further indicating the ongoing struggles in the industrial sector.
Although Germany’s trade balance for February showed a slight improvement, coming in at EUR 17.7 billion, it fell short of market expectations, contributing to the cautious sentiment surrounding the Euro.
US Dollar Struggles Amid Recession Fears and Rate Cut Expectations
On the other side of the Atlantic, the US dollar continues to face headwinds amid growing concerns of an impending recession. Despite a slight recovery, the USD struggles to capitalize on the momentum and starts the week weaker.
However, the key factor weighing on the dollar is the increasing probability that the US economy might enter a recession, which could force the Federal Reserve to resume its rate-cutting cycle.
The markets are currently pricing in the likelihood of four quarter-point rate cuts in 2025, which has led to a decline in US Treasury bond yields, further undermining the greenback.
US-EU Trade Tensions Weigh on EUR/USD Outlook Amid Economic Data Focus
Another factor that has been impacting the EUR/USD pair is the growing risk of a trade war between the US and the European Union. The EU is planning to introduce retaliatory tariffs on US goods in response to US duties on steel, aluminum, and cars.
These trade tensions are adding more uncertainty to global markets. While this could increase demand for the safe-haven US dollar, it may also limit the euro’s ability to rise further.
Looking ahead, traders will be watching economic data from the Eurozone, such as German industrial production, trade balance, and the Sentix Investor Confidence report.
However, the main factor likely to drive the EUR/USD pair in the near term will be how global trade tensions unfold, as any escalation could quickly shift market sentiment and affect both currencies.
EUR/USD – Technical Analysis
The EUR/USD is attempting to reclaim upside momentum against the U.S. dollar following a healthy pullback from $1.10484. Price action remains supported by a firm uptrend structure, with a rising trendline dating back to mid-March and the 50 EMA at $1.08619 now acting as dynamic support.
After rebounding off the $1.09519 level—a key horizontal and psychological zone—EUR/USD is showing renewed buying interest as it tests the pivot area near $1.1000. The recovery has paused just shy of immediate resistance at $1.10484, and a clean breakout above this zone would clear the path toward $1.11480 and $1.12208.
RSI is currently at 59.40 and turning higher, suggesting building momentum without being overbought. The pair remains technically constructive as long as price stays above the 50 EMA and ascending trendline. A break below $1.09519 would invalidate the immediate bullish bias, exposing downside risk toward $1.08617 and $1.07512.
Overall, the recent dip appears corrective, and the bullish trend remains intact unless key support levels fail. If bulls manage to secure a decisive close above $1.10484, continuation toward $1.11511 becomes increasingly probable, with higher resistance zones within reach.
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