EUR/USD Price Analysis – Jan 29, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair remained weak around the 1.0402 level, dipping to an intra-day low of 1.0394.
This downward movement is mainly due to the cautious mood in the market ahead of two key events. First, investors are awaiting the U.S.
Federal Reserve's (Fed) monetary policy announcement, expected at 19:00 GMT. The Fed is likely to keep interest rates steady at 4.25%-4.50%, as inflation has slowed but hasn't yet hit the target, and the labor market has stabilized. This uncertainty is keeping the EUR/USD pair under pressure.
Another factor weighing on the Euro is the European Central Bank’s (ECB) meeting scheduled for Thursday. The market has already priced in a 25 basis points (bps) rate cut, lowering the ECB's Deposit Rate to 2.75%.
Traders expect the ECB to continue cutting rates in the future, which would make the Euro less attractive in both the short and long term.
These two factors—the Fed’s cautious stance and the ECB’s expected rate cut—are contributing to the overall bearish sentiment for the EUR/USD pair.
EUR Under Pressure Amid ECB Rate Cuts and Concerns Over U.S. Tariffs
On the EUR front, the shared currency has been under pressure due to the upcoming European Central Bank (ECB) meeting, which is expected to result in a 25 basis point interest rate cut, bringing the Deposit Rate down to 2.75%.
Traders also expect the ECB to continue cutting rates in future meetings. These moves are seen as negative for the Euro in both the short and long term, adding to the cautious mood surrounding the EUR/USD pair.
However, the situation is worsened by concerns about the Eurozone economy, especially with the potential impact of U.S. President Trump’s tariffs.
Germany, the largest economy in the region, is predicted to face another year of economic decline, largely due to ongoing structural weaknesses that the government has failed to address.
The German economy is expected to shrink for the third consecutive year, with industrial growth particularly suffering.
Investors are closely watching ECB President Christine Lagarde’s press conference for more details on how Europe plans to respond to Trump’s tariffs.
Lagarde recently warned at the World Economic Forum that Europe needs to prepare for the possible impact, as Trump's tariffs could target specific sectors.
Analysts are concerned that these tariffs could hurt the Euro, with U.S. Treasury Secretary Scott Bessent proposing a universal 2.5% tariff, which could increase monthly. This raises concerns about the Euro’s potential for growth.
EUR/USD – Technical Analysis
The EUR/USD pair is showing modest gains, trading at $1.04421, up 0.12%, as it attempts to build momentum above key support levels. The price is hovering near the pivot point at $1.04208, signaling potential upside if buyers maintain control.
Technical indicators suggest that short-term bullish sentiment prevails, but the 50-day EMA at $1.04500 remains a key resistance level that must be breached for further gains.
A decisive move above $1.04667 could push EUR/USD toward the next resistance at $1.04990, with an extended rally targeting $1.05334.
However, failure to sustain above the pivot may trigger downside pressure, leading to immediate support at $1.03971, followed by deeper retracement toward $1.03721 and $1.03413.
The broader outlook depends on macroeconomic factors, including U.S. economic data, Federal Reserve policy signals, and European Central Bank rhetoric. If risk sentiment remains positive and the dollar weakens, EUR/USD could attempt a bullish breakout.
Given current price action, a buy position above $1.04208, with a target at $1.04674 and a stop-loss at $1.04015, aligns with the prevailing trend.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD trades above $1.04208 pivot; holding this level supports further upside.
- Immediate resistance at $1.04667; a breakout targets $1.04990 next.
- 50-day EMA at $1.04500 acts as a key hurdle; failure to clear it may trigger consolidation
The EUR/USD pair is showing modest gains, trading at $1.04421, up 0.12%, as it attempts to build momentum above key support levels. The price is hovering near the pivot point at $1.04208, signaling potential upside if buyers maintain control.
Technical indicators suggest that short-term bullish sentiment prevails, but the 50-day EMA at $1.04500 remains a key resistance level that must be breached for further gains.
A decisive move above $1.04667 could push EUR/USD toward the next resistance at $1.04990, with an extended rally targeting $1.05334.
However, failure to sustain above the pivot may trigger downside pressure, leading to immediate support at $1.03971, followed by deeper retracement toward $1.03721 and $1.03413.
The broader outlook depends on macroeconomic factors, including U.S. economic data, Federal Reserve policy signals, and European Central Bank rhetoric. If risk sentiment remains positive and the dollar weakens, EUR/USD could attempt a bullish breakout.
Given current price action, a buy position above $1.04208, with a target at $1.04674 and a stop-loss at $1.04015, aligns with the prevailing trend.
EUR/USD - Trade Ideas
Entry Price – Buy Above 1.04208
Take Profit – 1.04674
Stop Loss – 1.04015
Risk to Reward – 1: 2
Profit & Loss Per Standard Lot = +$466/ -$193
Profit & Loss Per Mini Lot = +$46/ -$19
EUR/USD Price Analysis – Jan 27, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair has been making a strong rebound, moving back towards the 1.0510 level. The pair is on track to break above its six-week high of 1.0520.
This recovery comes after the US Dollar gave up its earlier intraday gains, which had been fueled by concerns over potential tariffs on Colombia proposed by former President Donald Trump.
At the same time, the Euro (EUR) is gaining momentum as markets await the European Central Bank’s (ECB) upcoming monetary policy decision.
The ECB is widely expected to lower its Deposit Facility rate by 25 basis points, bringing it down to 2.75%.
Additionally, the Main Refinancing Operations Rate is likely to decrease to 2.9%. This would mark the fourth consecutive interest rate cut by the ECB.
EUR/USD Strengthens Ahead of ECB Rate Cut Expectations and Economic Data
On the EUR front, the shared currency has been strengthening as the US Dollar weakens. This move is largely driven by a shift in market sentiment, with traders anticipating a rate cut from the European Central Bank (ECB).
The ECB is expected to lower its Deposit Facility rate by 25 basis points, bringing it to 2.75%. This would be the fourth consecutive rate cut by the central bank.
As a result, the Euro is edging higher ahead of the ECB's monetary policy decision, with markets looking for fresh guidance from ECB President Christine Lagarde on how the bank plans to handle economic challenges, including the potential impact of former President Trump’s tariffs on the Eurozone.
Traders are confident that the ECB will continue to cut rates, especially given the Eurozone's inflation is under control and growth prospects remain sluggish.
Investors are also expecting three more rate cuts this year during the ECB's meetings in the first half. The upcoming press conference by Lagarde will be crucial for any hints on future monetary policies and the ECB’s response to external pressures.
On the economic front, data from Germany is showing mixed signals. The German IFO Business Climate Index rose slightly to 85.1 in January, beating expectations. However, the IFO Expectations Index, which gauges future sentiment, slowed more than expected.
This week, investors will also be focusing on the Eurozone’s preliminary Q4 GDP data, expected to show a 1% growth year-over-year, which is an improvement from the previous quarter's 0.9% growth.
US Dollar Weakens as Tariff Concerns Ease, Investors Eye Fed and ECB Rate Decisions
On the US front, the broad-based US dollar has reversed its earlier gains as concerns about tariffs on Colombia by former President Donald Trump eased. Trump had proposed a 25% tariff on Colombia after the country refused to accept military flights carrying deported immigrants from the US.
However, the situation shifted when the Colombian government agreed to Trump's terms, putting the proposed tariffs "on hold." As a result, the US Dollar Index (DXY), which tracks the Greenback against six major currencies, slid to around 107.00, driving the EUR/USD pair higher.
Market sentiment remains cautious, with investors awaiting important interest rate decisions from the Federal Reserve (Fed) and the European Central Bank (ECB) this week. The Fed is expected to keep interest rates unchanged within the 4.25%-4.50% range, according to the CME FedWatch tool.
Investors will be closely watching Fed Chair Jerome Powell's press conference for any hints about the central bank's stance, particularly in response to Trump's calls for immediate rate cuts.
On the US economic front, key data releases this week include Durable Goods Orders, the Personal Consumer Expenditure Price Index (PCE) for December, and preliminary Q4 Gross Domestic Product (GDP) data.
These reports will provide further insights into the strength of the US economy and could influence market expectations around future Fed policy.
The easing of tariff concerns between the US and Colombia has led to a weaker US Dollar, causing the EUR/USD pair to rise. Investor focus on upcoming interest rate decisions from the Fed and ECB adds further uncertainty to the pair's movement.
EUR/USD – Technical Analysis
The EUR/USD pair is experiencing downward pressure, currently trading at $1.04591, marking a 0.32% decline for the session. The pair has struggled to hold above the pivot point at $1.04471, which serves as a key level for directional bias.
A sustained move above this level could trigger renewed bullish momentum, with immediate resistance standing at $1.04971. Further upside potential is seen at $1.05329 and $1.05682 if bullish sentiment persists.
On the downside, the pair faces immediate support at $1.03971, with additional cushions at $1.03515 and $1.03012. A break below these levels could intensify selling pressure, pushing EUR/USD into a deeper correction phase.
The broader market sentiment remains cautious as investors await key economic data from the Eurozone and the U.S., particularly inflation reports and central bank commentary, which could drive volatility in the pair.
Technical indicators suggest a neutral to bullish outlook, with the 50-day EMA positioned at $1.04269, providing dynamic support.
If the pair maintains strength above this moving average, it could signal further buying interest. However, failure to sustain above $1.04470 might invite sellers back into the market.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD faces resistance at $1.04971; a break above could fuel bullish momentum.
- The pair remains supported above the 50 EMA at $1.04269, signaling possible upward movement.
- A break below $1.03971 support could push the pair lower toward $1.03515.
The EUR/USD pair is experiencing downward pressure, currently trading at $1.04591, marking a 0.32% decline for the session. The pair has struggled to hold above the pivot point at $1.04471, which serves as a key level for directional bias.
A sustained move above this level could trigger renewed bullish momentum, with immediate resistance standing at $1.04971. Further upside potential is seen at $1.05329 and $1.05682 if bullish sentiment persists.
On the downside, the pair faces immediate support at $1.03971, with additional cushions at $1.03515 and $1.03012. A break below these levels could intensify selling pressure, pushing EUR/USD into a deeper correction phase.
The broader market sentiment remains cautious as investors await key economic data from the Eurozone and the U.S., particularly inflation reports and central bank commentary, which could drive volatility in the pair.
Technical indicators suggest a neutral to bullish outlook, with the 50-day EMA positioned at $1.04269, providing dynamic support.
If the pair maintains strength above this moving average, it could signal further buying interest. However, failure to sustain above $1.04470 might invite sellers back into the market.
EUR/USD - Trade Ideas
Entry Price – Buy Above 1.04470
Take Profit – 1.04967
Stop Loss – 1.04100
Risk to Reward – 1: 1.3
Profit & Loss Per Standard Lot = +$497/ -$370
Profit & Loss Per Mini Lot = +$49/ -$370
EUR/USD Price Analysis – Jan 24, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its upward trend, reaching an intra-day high of 1.0515.
This bullish rally was driven by positive economic data from the Eurozone. Another factor supporting the EUR/USD rally is the decline in the US Dollar’s (USD) strength.
Moving ahead, the key focus for the EUR/USD pair will be the Federal Reserve’s policy decision on Wednesday, with rates expected to stay at 4.25%-4.50%.
Investors will also pay close attention to Fed Chair Jerome Powell’s comments for policy clues. Meanwhile, January’s US S&P Global PMI data at 14:45 GMT could affect EUR/USD sentiment.
Euro Gains Momentum on Strong PMI Data but Faces Dovish ECB Outlook
The shared currency has gained strength after encouraging economic data from the Eurozone. On the data front, the Hamburg Commercial Bank (HCOB) reported that the preliminary Composite Purchasing Managers Index (PMI), compiled by S&P Global, improved in January, rising to 50.2 from 49.6 in November.
This marks a return to growth after two months of contraction. Economists had expected the PMI to decline slightly to 49.7, but the better-than-expected data suggests cautious optimism for the region’s economy.
The report showed strong demand for labor and new business growth in the services sector, though the manufacturing sector still faces issues like layoffs and declining orders. Dr. Cyrus de la Rubia, Chief Economist at HCOB, said the start of the year is "mildly encouraging," with cautious growth in the private sector.
Although the positive PMI has helped the Euro in the short term, its overall outlook remains uncertain. The European Central Bank (ECB) is expected to lower its Deposit Facility rate by 25 basis points to 2.75% in its upcoming meeting. As inflation is expected to ease, the ECB may continue its cautious approach, limiting the Euro's long-term growth.
US Dollar Weakens Amid Trade Deal Hopes and Fed Policy Anticipation
On the US front, the broad-based US Dollar has weakened amid increasing bets of rate cuts. The US Dollar Index (DXY), which tracks the Dollar’s value against six major currencies, fell 0.6% on Friday, hitting a fresh five-week low near 107.45.
This decline followed remarks from former President Donald Trump, who suggested he could reach a trade deal with China without imposing heavy tariffs.
During his election campaign, Trump had threatened to impose 60% tariffs on China and 25% on other North American economies, which supported the Dollar's earlier strength.
However, his recent comments about a potential deal have reduced market fears of aggressive trade measures.
Trump’s statement at the World Economic Forum (WEF) in Davos, where he endorsed immediate interest rate cuts, further pressured the Dollar.
His remarks, along with easing trade tension expectations, shifted market sentiment and weighed on the Greenback.
Looking ahead, the Federal Reserve’s upcoming monetary policy decision on Wednesday will be a key event for the US Dollar.
While the Fed is expected to keep interest rates steady at 4.25%-4.50%, Fed Chair Jerome Powell’s statements will be closely analyzed for alignment with Trump’s views.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.04517, up 0.35%, as the pair continues to exhibit a bullish bias above the pivot point of $1.04324.
The currency pair is facing immediate resistance at $1.04971, with the next key levels to watch at $1.05329 and $1.05682. A break above these resistance zones could reinforce bullish momentum, potentially pushing the pair toward higher levels.
On the downside, immediate support is situated at $1.03721, with further safety nets at $1.03415 and $1.03012. The 50-day Exponential Moving Average (EMA) at $1.03986 provides dynamic support, suggesting that the short-term trend remains favorable for the bulls.
Holding above this level could further cement the bullish outlook, encouraging buyers to test higher resistance levels.
From a technical perspective, the upward movement is supported by improving sentiment and technical strength, with the pair maintaining its position above key support levels.
However, if EUR/USD fails to hold above the pivot of $1.04324, it could invite selling pressure, potentially driving prices toward immediate support levels.
Traders should closely watch the resistance at $1.04971, as a sustained move above this threshold could confirm further bullish sentiment. Conversely, a break below the pivot may expose the pair to further downside risk.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD maintains a bullish stance above $1.04324; immediate resistance is at $1.04971.
- The 50 EMA at $1.03986 offers dynamic support, reinforcing upward potential.
- A breakout above $1.04971 could drive the pair toward the next resistance at $1.05329.
EUR/USD is trading at $1.04517, up 0.35%, as the pair continues to exhibit a bullish bias above the pivot point of $1.04324.
The currency pair is facing immediate resistance at $1.04971, with the next key levels to watch at $1.05329 and $1.05682. A break above these resistance zones could reinforce bullish momentum, potentially pushing the pair toward higher levels.
On the downside, immediate support is situated at $1.03721, with further safety nets at $1.03415 and $1.03012. The 50-day Exponential Moving Average (EMA) at $1.03986 provides dynamic support, suggesting that the short-term trend remains favorable for the bulls.
Holding above this level could further cement the bullish outlook, encouraging buyers to test higher resistance levels.
From a technical perspective, the upward movement is supported by improving sentiment and technical strength, with the pair maintaining its position above key support levels.
However, if EUR/USD fails to hold above the pivot of $1.04324, it could invite selling pressure, potentially driving prices toward immediate support levels.
Traders should closely watch the resistance at $1.04971, as a sustained move above this threshold could confirm further bullish sentiment. Conversely, a break below the pivot may expose the pair to further downside risk.
EUR/USD - Trade Ideas
Entry Price – Buy Above 1.04323
Take Profit – 1.04961
Stop Loss – 1.04037
Risk to Reward – 1: 2.2
Profit & Loss Per Standard Lot = +$638/ -$286
Profit & Loss Per Mini Lot = +$63/ -$28
EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD must hold above the pivot point at $1.03904 to sustain bullish momentum.
- Resistance levels at $1.04339 and $1.04844 remain key hurdles for further upside potential.
- A break below $1.03428 could expose the pair to further downside, testing the 50-day EMA at $1.03375.
The EUR/USD pair is trading at $1.04117, down 0.12%, as the currency pair navigates a cautious market environment amid evolving macroeconomic conditions. The price remains slightly above the pivot point at $1.03904, which acts as a critical level for near-term directional bias.
A sustained move above this level could bolster bullish sentiment, targeting immediate resistance at $1.04339, with subsequent levels at $1.04844 and $1.05352. However, failure to break above the resistance zones may limit upside momentum, keeping the pair within a consolidation phase.
On the downside, immediate support is seen at $1.03428, followed by key support at $1.02906 and $1.02388. A break below these levels could invite further selling pressure, potentially driving the pair toward lower support zones and increasing bearish sentiment in the market.
The 50-day EMA, currently at $1.03375, is providing a key dynamic support level, reinforcing the significance of maintaining levels above $1.03910 to sustain a bullish outlook.
From a technical perspective, the pair remains in a neutral to slightly bullish trend, with buyers expected to step in above $1.03910, targeting $1.04636 as a near-term profit objective.
However, downside risks persist, with a stop-loss level at $1.03388 to mitigate potential losses. Traders should watch for upcoming economic releases and market sentiment shifts that could influence price action.
EUR/USD - Trade Ideas
Entry Price – Buy Above 1.03910
Take Profit – 1.04636
Stop Loss – 1.03388
Risk to Reward – 1: 1.3
Profit & Loss Per Standard Lot = +$726/ -$522
Profit & Loss Per Mini Lot = +$72/ -$52
EUR/USD Price Analysis – Jan 22, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair sustained its upward trend and remained well bid around the 1.0448 level, reaching an intra-day high of 1.0452.
However, the major factor behind this upward trend is largely attributed to investor sentiment, as market participants cautiously await further details on the United States (US) tariff plans.
These plans could have a impact on the Eurozone, and traders are closely monitoring any developments that might create fresh opportunities or risks for the EUR/USD exchange rate.
Despite the recent gains, the outlook for EUR/USD remains uncertain, as geopolitical and economic factors continue to shape its direction.
President Trump’s threats of imposing tariffs on the Eurozone add an element of volatility, while the European Central Bank (ECB) is expected to ease some of its restrictive policies, moving toward a more neutral 2% inflation target.
This could provide some support to the euro. However, with mixed signals coming from both the US and Eurozone economies, the EUR/USD pair's performance will depend on how these factors unfold in the coming days.
EUR/USD Outlook Uncertainty Amid US Tariff Threats and ECB Rate Cuts
On the EUR front, the shared currency has shown a significant recovery in recent days. However, the outlook for EUR/USD remains uncertain due to concerns over US tariffs. President Trump has threatened to impose tariffs on the Eurozone, adding pressure to the currency pair.
In response, European Union (EU) officials have emphasized that instead of retaliating, the EU should focus on improving its competitiveness and developing stronger capital markets. This shift in strategy is meant to better position the region in the face of potential trade tensions.
Meanwhile, ECB President Christine Lagarde spoke at the World Economic Forum, stating that Europe must be ready for any US tariffs. She also mentioned that the tariffs would likely be more selective in nature.
The ongoing trade tension between the EU and US has worsened since Trump’s withdrawal from the Paris Climate Agreement, which had set targets for reducing greenhouse gas emissions. This move has further strained EU-US relations, with the possibility of more economic challenges ahead.
On the monetary policy front, traders expect the European Central Bank (ECB) to cut interest rates by 25 basis points (bps) in each of its next four meetings.
ECB policymaker Yannis Stournaras has suggested that these cuts are necessary to bring inflation closer to the ECB’s 2% target by the end of 2025.
He also warned that US tariffs could speed up these rate cuts in the Eurozone, adding further uncertainty to the market.
Therefore, the news of potential US tariffs on the Eurozone, along with ECB rate cuts and trade tensions, adds uncertainty to the EUR/USD pair. This could lead to increased volatility, with the euro potentially weakening if tariff threats intensify or if rate cuts accelerate.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.04117, down 0.12%, as the currency pair navigates a cautious market environment amid evolving macroeconomic conditions. The price remains slightly above the pivot point at $1.03904, which acts as a critical level for near-term directional bias.
A sustained move above this level could bolster bullish sentiment, targeting immediate resistance at $1.04339, with subsequent levels at $1.04844 and $1.05352. However, failure to break above the resistance zones may limit upside momentum, keeping the pair within a consolidation phase.
On the downside, immediate support is seen at $1.03428, followed by key support at $1.02906 and $1.02388. A break below these levels could invite further selling pressure, potentially driving the pair toward lower support zones and increasing bearish sentiment in the market.
The 50-day EMA, currently at $1.03375, is providing a key dynamic support level, reinforcing the significance of maintaining levels above $1.03910 to sustain a bullish outlook.
From a technical perspective, the pair remains in a neutral to slightly bullish trend, with buyers expected to step in above $1.03910, targeting $1.04636 as a near-term profit objective.
However, downside risks persist, with a stop-loss level at $1.03388 to mitigate potential losses. Traders should watch for upcoming economic releases and market sentiment shifts that could influence price action.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD faces immediate resistance at $1.03720, with further upside barriers at $1.04338 and $1.05030, while support stands at $1.02406, $1.01867, and $1.01288.
- The pair is trading slightly above the 50-day EMA at $1.02841, hinting at a cautious bullish stance unless a decisive break below occurs.
- A sell strategy below $1.03304 is favored, with a take-profit target at $1.02405 and a stop-loss at $1.03851 to manage potential reversals.
EUR/USD is trading at $1.03055, up 0.38%, as the pair hovers around key technical levels amid cautious sentiment in the forex market. The pair has been attempting to recover from recent lows, but upside momentum remains constrained by overhead resistance levels.
On the 4-hour chart, the immediate pivot point stands at $1.03295, a critical threshold that the pair is currently testing. A decisive move above this level could open the door to further gains, with immediate resistance at $1.03720, followed by secondary hurdles at $1.04338 and $1.05030.
However, failure to sustain momentum above the pivot point may reinforce downside pressure, with key support levels at $1.02406, followed by $1.01867, and deeper support at $1.01288, which could act as potential rebound zones.
From a technical perspective, the 50-day EMA, currently positioned at $1.02841, suggests a mildly bullish bias, with prices hovering slightly above it. This could indicate short-term buying interest, but a sustained break below the EMA may signal renewed bearish pressure.
In conclusion, a short position below $1.03304 could offer a favorable risk-reward setup, targeting $1.02405 for take-profit, with a stop-loss placed at $1.03851, ensuring protection against potential upward spikes.
Traders are advised to monitor market sentiment closely, as upcoming economic data releases and geopolitical developments could introduce volatility.
EUR/USD - Trade Ideas
Entry Price – Sell Below 1.03304
Take Profit – 1.02405
Stop Loss – 1.03851
Risk to Reward – 1: 1.6
Profit & Loss Per Standard Lot = +$899/ -$547
Profit & Loss Per Mini Lot = +$89/ -$54
EUR/USD Price Analysis – Jan 17, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair managed to halt its downward trend, gaining modest traction at 1.0303 and reaching an intra-day high of 1.0310.
The pair's recent decline can be attributed to investor focus on the upcoming inauguration of US President-elect Donald Trump on Monday.
Moreover, the Euro (EUR) remains under pressure due to a weak economic outlook, compounded by persistent dovish expectations surrounding the European Central Bank (ECB).
Traders are pricing in a 25 basis point rate cut by the ECB at each of its next four policy meetings, fueled by concerns over the Eurozone's economic growth and the subdued price pressures in the region.
EUR/USD Faces Downward Pressure Amid ECB Rate Cut Expectations and US Tariff Concerns
On the EUR front, the shared currency remains under pressure as the outlook for the Euro (EUR) stays weak. This is largely due to growing expectations that the European Central Bank (ECB) will continue with interest rate cuts.
Traders are predicting a 25 basis point rate cut by the ECB at each of its next four meetings, driven by concerns over the Eurozone's economic outlook and subdued price pressures.
On the other hand, the ECB is also showing a readiness for further rate cuts. The minutes from the December ECB meeting, released last Thursday, revealed that officials discussed easing policies more than pausing them.
There was even talk of a larger 50 basis point rate cut to address downside risks to growth, caused by both global and domestic political uncertainties. Ultimately, the ECB opted for a 25 basis point cut, signaling ongoing concerns about economic growth.
Therefore, the growing expectations of continued ECB rate cuts and concerns over the Eurozone's economic outlook, combined with potential US tariff hikes, put significant downward pressure on the EUR/USD currency pair, increasing the likelihood of further declines or even reaching parity.
US Dollar Remains Firm Amid Anticipation of Trump’s Economic Policies and Fed Rate Cut Expectations
On the US front, the broad-based US dollar is moving within Thursday’s trading range as investors keep a close eye on US President-elect Donald Trump’s upcoming inauguration on Monday.
The market is awaiting Trump’s economic policy announcements, which are expected to offer fresh insight into the US economic outlook and potential changes to global trade dynamics.
Many experts believe that Trump’s policies could lead to higher inflation and economic growth but also risk triggering a global trade war.
At a Senate Finance Committee meeting on Wednesday, Trump’s treasury pick, Scott Bessent, stressed the need to reform the current tax system to avoid a massive $4 trillion burden on the middle class.
He warned of an "economic calamity" if the tax system is not renewed and extended. Bessent also voiced support for Trump’s protectionist policies, arguing that they would help address unfair trade practices and give the US greater leverage in global negotiations.
Meanwhile, the US Dollar Index (DXY), which tracks the value of the US dollar against six major currencies, has shown a slight increase, holding key support at 109.00.
The US dollar remains firm, despite traders beginning to price in the possibility of at least one interest rate cut by the Federal Reserve this year.
This shift comes after the core Consumer Price Index (CPI), which excludes food and energy prices, slowed to 3.2% in December, its lowest rate in over four years, fueling expectations of a more dovish Fed stance.
Therefore, the US dollar's strength, driven by expectations of Trump’s policies and a firm US Dollar Index, puts downward pressure on the EUR/USD pair, potentially leading to further declines as traders anticipate Fed rate cuts.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.02866, down 0.09%, as it struggles to recover above the pivot point at $1.03196. The pair remains under pressure amid subdued market sentiment and a stronger U.S. Dollar, signaling potential downside risks.
Immediate resistance is located at $1.03720, with additional barriers at $1.04338 and $1.05131. On the downside, key support is seen at $1.02406, followed by deeper levels at $1.01867 and $1.01288.
The 50-day EMA at $1.02938 aligns closely with the current price action, providing a short-term barrier to any bullish attempts.
The inability to sustain above the pivot point suggests cautious sentiment, while a break below the immediate support at $1.02406 could intensify selling pressure, targeting lower levels.
From a technical perspective, a sustained move above $1.03196 is required to signal a potential bullish reversal, with an upside target of $1.03720.
Conversely, failure to hold above the pivot may lead to a retest of $1.02406, with further declines toward $1.01867 likely if bearish momentum persists.
Market participants should closely monitor the $1.03196 pivot point, as it serves as a crucial decision level for directional movement. While the broader trend remains bearish, a break above resistance could provide relief for the euro.
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