Daily Price Outlook
During Friday’s European session, the EUR/USD currency pair extended its bullish momentum, surging above the 1.0850 level and hitting the intra-day high of 1.0871level.
However, the shared currency gained traction as traders reassessed their expectations for the European Central Bank (ECB) after Germany confirmed a €500 billion infrastructure fund and proposed changes to the "debt brake."
These reforms could lead to higher inflation, which may slow down the ECB’s plans to cut interest rates. However, ECB President Christine Lagarde avoided commenting on these changes during her press conference, saying that increased spending on defense and infrastructure is still under review.
With inflation concerns rising, market expectations for ECB rate cuts have shifted. Traders now speculate that the ECB may pause its rate-cutting cycle in April after five consecutive reductions. Before the ECB’s latest meeting, investors had expected two more rate cuts by summer.
Lagarde maintained a cautious stance, saying future rate decisions would be based on economic data and decided on a "meeting-by-meeting" basis. This uncertainty, combined with a weaker US Dollar, has helped EUR/USD maintain its bullish momentum.
US Dollar Weakness and Market Sentiment
Another factor that has been supporting the EUR/USD pair is the US Dollar’s weakness ahead of the US Nonfarm Payrolls (NFP) report.
The US Dollar Index (DXY), which tracks the USD against major currencies, has been falling for five straight days, reaching a four-month low of 103.60.
Meanwhile, the US economic outlook and Trump’s tariff policies have added pressure on the US Dollar. Investors worry that higher tariffs could hurt US importers and reduce consumer spending, weakening the economy.
On Thursday, Trump temporarily eased some tariffs under the US-Mexico-Canada Agreement (USMCA) but confirmed that new tariffs will take effect on April 2.
Moving ahead, the upcoming US NFP report is expected to show an increase of 160K jobs in February, higher than the 143K recorded in January.
In the meantime, the Unemployment Rate is projected to remain steady at 4%, while Average Hourly Earnings are anticipated to rise by 4.1% year-on-year.
However, the month-on-month wage growth rate is expected to slow to 0.3%, down from 0.5% in January.
On the other hand, the next major event for the Euro is the German parliamentary vote on debt brake reforms, scheduled for March 18.
This could affect inflation and influence the ECB’s decisions. On the other hand, US job data will give more clues about the Fed’s next moves, which will impact EUR/USD trends. (edited)
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.08178, holding steady as markets digest economic data and central bank signals. The pair remains above its pivot point at $1.07640, indicating near-term bullish sentiment, though gains are limited by key resistance at $1.08521.
On the downside, immediate support is seen at $1.07100, with deeper levels at $1.06579 and $1.06049. A move below the pivot point may weaken sentiment, triggering a shift toward a bearish outlook.
The 50-day EMA at $1.06489 is acting as dynamic support, reinforcing buyers' control. The euro’s performance remains tied to expectations surrounding the Federal Reserve and European Central Bank (ECB) policy outlook.
A dovish Fed stance could weaken the dollar, providing support to EUR/USD, while stronger U.S. labor market data may strengthen the greenback, capping further gains in the euro.
Looking ahead, traders will focus on Friday’s U.S. Nonfarm Payrolls (NFP) report, which could set the tone for the Federal Reserve’s next move.
If job growth exceeds expectations, it may fuel speculation of delayed rate cuts, potentially driving EUR/USD lower. Conversely, a weaker labor market print could reinforce Fed easing bets, pushing the pair higher.
A decisive break above $1.08521 would confirm bullish momentum, while a drop below $1.07640 could trigger further downside pressure.
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