EUR/USD Price Analysis – March 10, 2025

Daily Price Outlook

During the European trading session, the EUR/USD currency pair extend its upward trend and remained bullish around above 1.0875 level.

However, the shared currency has gained momentum amid positive Eurozone data. Meanwhile, the bearish US dollar, pressured by the signs of an economic slowdown, was seen as another key factor that supported the EUR/USD pair.

Eurozone Sentix Investor Confidence Index Jumps to -2.9 in March

On the data front, the latest Eurozone Sentix Investor Confidence Index for March surged to -2.9, a sharp improvement from February's reading of -12.7.

This unexpected uptick in investor sentiment signals a recovery in confidence about the economic outlook for the region, particularly in Germany, the Eurozone’s economic powerhouse.

According to Sentix, Germany’s industrial sector saw an impressive boost in January, with industrial output rising by 2% month-on-month (MoM), beating expectations of a 1.5% increase.

Sentix described investor sentiment in Germany as “downright euphoric,” suggesting a growing belief that the country’s economy is on a positive trajectory.

Meanwhile, the Eurozone’s current situation indicator also showed progress, increasing to -21.8 from -25.5 in February. This suggests that investors are becoming increasingly optimistic about the region’s recovery, supported by Germany’s strong economic performance.

Therefore, the improvement in the Eurozone Sentix Investor Confidence Index, especially driven by Germany's strong economic performance, boosts investor optimism, supporting EUR/USD gains as confidence in the Eurozone rises.

Weak US Data and Trump’s Uncertain Economic Agenda Weigh on USD

On the other hand, the US Dollar faced downward pressure as the market digested disappointing economic data and increasing concerns over President Donald Trump’s economic policies.

Data showing a 15-month low in US Consumer Confidence, a drop in ISM Manufacturing New Orders, and weaker-than-expected Nonfarm Payrolls (NFP) data for February have raised doubts about the strength of the US economy.

These indicators suggest that the US may be headed for a slowdown, adding to worries over the effectiveness of Trump’s "America First" policies.

In a recent interview with Fox News, Trump acknowledged that his administration’s policies would result in short-term economic shocks, reinforcing fears of potential disruption to the US economy. Trump’s unpredictable tariff and tax policies have created uncertainty, leading investors to scale back expectations for US growth in the near term.

As a result, market participants are increasingly betting on the Federal Reserve (Fed) to resume its policy easing cycle, with the likelihood of a rate cut in the June meeting rising to 82%, up from 54% a month ago.

Fed Chair Jerome Powell has maintained a cautious stance, emphasizing the uncertainty surrounding Trump’s economic agenda and its effects on the broader economy.

Euro Faces Pressure from ECB’s Caution on Interest Rates

Despite the positive data from the Eurozone, the Euro is facing some challenges in the short term. After strong gains last week, traders are taking profits, which is putting some pressure on the currency.

Additionally, there are concerns about the European Central Bank's (ECB) future actions. Last week, the ECB cut its Deposit Facility rate by 25 basis points to 2.5%, but they did not commit to further rate cuts or a broader expansion of monetary policy.

ECB officials, including Mario Centeno, have indicated that the Eurozone is moving towards "normalizing" its monetary policy, with inflation decreasing and getting closer to the ECB’s target. These factors are causing some caution around the Euro’s near-term performance.

On the other hand, Germany’s move to extend its borrowing limit and establish a EUR500 billion infrastructure fund for defense spending has forced traders to revise expectations for ECB rate cuts. As a result, the Euro’s bullish momentum has been capped, although sentiment remains generally positive.

EUR/USD – Technical Analysis

The EUR/USD pair remains in a tight consolidation phase, hovering around $1.08338 after a recent pullback from its highs. The pair is struggling to gain significant bullish traction but remains supported above the 50-day EMA at $1.07483, reinforcing the broader uptrend.

On the upside, the first key resistance is at $1.08855, which aligns with recent highs. A decisive breakout above this level could trigger further gains toward $1.09312, followed by $1.09686, where sellers may emerge. However, failure to clear these levels could lead to renewed selling pressure.

On the downside, immediate support lies at $1.07658, aligning with last week's lows. If this level gives way, EUR/USD could retest the next key supports at $1.07164 and $1.06579. A break below these zones would expose the pair to further downside risk, potentially targeting the 200-day EMA near $1.0562.

Fundamentally, traders remain cautious ahead of key U.S. inflation data, which could influence Federal Reserve rate expectations.

A stronger-than-expected CPI report may bolster the U.S. dollar, pressuring EUR/USD lower, while weaker data could fuel expectations of an earlier Fed rate cut, supporting further upside in the pair.

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