EUR/USD Price Analysis – April 14, 2025
Daily Price Outlook
During Monday’s European trading session, the EUR/USD pair maintained it upward trend and surged to near 1.1425 level. However, the euro showed impressive strength as the US Dollar (USD) continued its decline amid increasing fears of stagflation in the United States, where inflation is rising, economic growth is slowing, and unemployment is cooling down.
US Dollar Under Pressure Amid Stagflation Concerns and US-China Trade Tensions
On the US front, the broad based US dollar has been under pressure as market participants anticipate stagflation in the US, particularly after the University of Michigan's preliminary Consumer Sentiment Index fell to 50.8 in April, its lowest since June 2022.
The decline reflects deepening concerns about a potential recession as US households worry about escalating trade tensions with China.
On Friday, China retaliated by increasing tariffs on US goods to 125%, compounding fears of a trade war that could hinder investment and economic growth.
Meanwhile, the University of Michigan's 12-month forward inflation expectations surged to 6.7%, up from 5% in March, signaling rising concerns over persistent inflation.
These negative economic signals are adding to expectations that the Federal Reserve (Fed) may struggle to bring inflation under control, contributing to the weakening of the USD.
ECB Rate Cut Expectations and Euro Strength Amid US-China Tariff Tensions
The euro has continued to strengthen as traders expect the European Central Bank (ECB) to cut its Deposit Facility Rate by 25 basis points (bps) this Thursday. If this happens, it would be the seventh consecutive 25 bps cut since June.
Many traders are confident that the ECB will ease its monetary policy further, as they believe the US-driven trade war will not cause inflation in the Eurozone.
Moreover, the ongoing trade war between the US and China is expected to shift some of China’s exports to the Eurozone. This benefits Eurozone importers, who will choose Chinese products over domestically made goods due to their cost advantage. This shift is seen as a way to offset the impact of US tariffs on global inflation, providing further support for the euro.
ECB officials, including Gediminas Šimkus, have suggested that cutting interest rates could help boost economic growth in the face of trade tensions. Šimkus also emphasized the need for a "less restrictive policy" to address challenges caused by the tariff dispute.
Furthermore, EU finance ministers have agreed to present a unified stance in trade talks with the US, which is expected to increase the euro’s appeal.
EUR/USD – Technical Analysis
The euro continues its strong upward trajectory against the dollar, trading around $1.14158 after breaking above the psychological $1.13960 pivot. The bullish trend remains intact, supported by a steep ascending structure and consistent higher highs. Price action has extended well beyond the 50 EMA ($1.10505), underlining bullish dominance.
Immediate resistance lies at $1.14661, and a break above could expose $1.14895, the next logical technical target. Beyond that, $1.15533 becomes relevant based on the 2.618 Fibonacci extension.
On the downside, $1.13330 serves as immediate support, followed by $1.13015 and $1.12505. The Relative Strength Index at 70.50 suggests momentum remains elevated, though near-term exhaustion is possible. Traders should monitor potential profit-taking around $1.14895.
The bullish setup remains favorable as long as EUR/USD holds above $1.13960. A confirmed break above resistance could fuel further upside, but overbought signals may prompt a brief pause or consolidation.
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