EUR/USD Price Forecast: Decent contention emerged around 1.1300
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UPGRADE- EUR/USD managed to leave behind part of the recent weakness on Thursday.
- The US Dollar resumed its downside in response to US-China uncertainty.
- Germany’s Business Climate improved marginally in April according to IFO.
The Euro regained fresh upside impulse on Thursday, with EUR/USD retesting the 1.1400 region as the US Dollar (USD) met some downside pressure. Indeed, the Greenback retreated markedly on fresh concerns over US-China trade conflict, pushing the Dollar Index (DXY) back to the low-99.00s.
Scepticism increase around tariff progress
Although the broader trade backdrop remains uncertain, market sentiment seems to have found support after the White House suggested earlier in the week it may consider lowering tariffs on Chinese imports.
That followed earlier remarks from Treasury Secretary S. Bessent, who pointed to potential de-escalation in the US-China trade dispute.
However, market participants remained apathetic on the real progress of the ongoing US-China trade effervescence.
Policy divergence widens: Fed steady, ECB eases
The Federal Reserve (Fed) maintained its policy rate at 4.25%–4.50% in March, with Chair Jerome Powell reaffirming the focus on taming inflation—even as new tariffs risk reigniting stagflation concerns. Powell reiterated that future policy moves will remain firmly data-dependent, reflecting the Fed’s delicate balancing act.
In contrast, the European Central Bank (ECB) delivered a 25 basis-point rate cut to 2.25%, while dropping the term “restrictive” from its policy guidance. The ECB retained a data-dependent tone, fuelling speculation of another rate reduction in June.
Trump-Powell friction cools
Also supporting market stability in past hours was President Trump’s assurance that he has no plans to remove Fed Chair Powell—a comment that eased market fears over central bank independence and added to the dollar’s bid.
Speculative flows point to growing Euro optimism
Latest CFTC data shows a growing bullish tilt toward the euro, with net long positions rising to 69.3K contracts—the highest since September 2024. At the same time, commercial hedgers extended their short exposure to nearly 118K contracts, as open interest surged to a one-month high above 708K.
Technical setup
EUR/USD faces immediate resistance at the 2025 high of 1.1572, followed by 1.1600 and the October 2021 peak of 1.1692.
On the downside, key support sits near the 200-day simple moving average (SMA) at 1.0768, with additional protection around the March 27 low of 1.0732.
Momentum indicators remain supportive of the broader uptrend. The Relative Strength Index (RSI) has improved to around 63, while the ADX—hovering above 51—signals a still-strong directional bias.
EUR/USD daily chart
Outlook: Central bank divergence, trade policy keep volatility elevated
With US-China trade policy in flux and the Fed-ECB policy gap widening, EUR/USD remains vulnerable to headline-driven moves. Until a clearer trajectory emerges from both central banks—or a breakthrough on tariffs—volatility is likely to remain a dominant theme.
- EUR/USD managed to leave behind part of the recent weakness on Thursday.
- The US Dollar resumed its downside in response to US-China uncertainty.
- Germany’s Business Climate improved marginally in April according to IFO.
The Euro regained fresh upside impulse on Thursday, with EUR/USD retesting the 1.1400 region as the US Dollar (USD) met some downside pressure. Indeed, the Greenback retreated markedly on fresh concerns over US-China trade conflict, pushing the Dollar Index (DXY) back to the low-99.00s.
Scepticism increase around tariff progress
Although the broader trade backdrop remains uncertain, market sentiment seems to have found support after the White House suggested earlier in the week it may consider lowering tariffs on Chinese imports.
That followed earlier remarks from Treasury Secretary S. Bessent, who pointed to potential de-escalation in the US-China trade dispute.
However, market participants remained apathetic on the real progress of the ongoing US-China trade effervescence.
Policy divergence widens: Fed steady, ECB eases
The Federal Reserve (Fed) maintained its policy rate at 4.25%–4.50% in March, with Chair Jerome Powell reaffirming the focus on taming inflation—even as new tariffs risk reigniting stagflation concerns. Powell reiterated that future policy moves will remain firmly data-dependent, reflecting the Fed’s delicate balancing act.
In contrast, the European Central Bank (ECB) delivered a 25 basis-point rate cut to 2.25%, while dropping the term “restrictive” from its policy guidance. The ECB retained a data-dependent tone, fuelling speculation of another rate reduction in June.
Trump-Powell friction cools
Also supporting market stability in past hours was President Trump’s assurance that he has no plans to remove Fed Chair Powell—a comment that eased market fears over central bank independence and added to the dollar’s bid.
Speculative flows point to growing Euro optimism
Latest CFTC data shows a growing bullish tilt toward the euro, with net long positions rising to 69.3K contracts—the highest since September 2024. At the same time, commercial hedgers extended their short exposure to nearly 118K contracts, as open interest surged to a one-month high above 708K.
Technical setup
EUR/USD faces immediate resistance at the 2025 high of 1.1572, followed by 1.1600 and the October 2021 peak of 1.1692.
On the downside, key support sits near the 200-day simple moving average (SMA) at 1.0768, with additional protection around the March 27 low of 1.0732.
Momentum indicators remain supportive of the broader uptrend. The Relative Strength Index (RSI) has improved to around 63, while the ADX—hovering above 51—signals a still-strong directional bias.
EUR/USD daily chart
Outlook: Central bank divergence, trade policy keep volatility elevated
With US-China trade policy in flux and the Fed-ECB policy gap widening, EUR/USD remains vulnerable to headline-driven moves. Until a clearer trajectory emerges from both central banks—or a breakthrough on tariffs—volatility is likely to remain a dominant theme.
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