• EUR/USD reversed part of the recent strong gains.
  • The ECB kept its policy rates unchanged, as expected.
  • ECB’s Lagarde sees inflation hitting the target in H2 2025.

The US Dollar (USD) regained momentum on Thursday, lifting the USD Index (DXY) back above the 104.00 barrier, helped by the decent bounce in US yields across various maturity periods.

Against that, EUR/USD set aside two consecutive sessions of gains and challenged the 1.0900 region, also following the dovish hold by the ECB at its meeting on Thursday and a marginal uptick in German 10-year bund yields.

Back to the ECB event, during her press conference, President Christine Lagarde argued that she expects the recovery to be supported by consumption, highlighting the resilience of the labour market. She also noted that domestic inflation remains high and that wages are rising at an elevated rate. Additionally, she projected that the Harmonized Index of Consumer Prices (HICP) would decline to the bank’s target in the second half of 2025. Furthermore, Lagarde also identified wages, profits, and geopolitical factors as potential upside risks to inflation.

Conversely, there is ongoing debate among investors about whether the Fed will implement one, two, or three rate cuts this year, despite the Fed's current projection of a single cut, likely in December.

The CME Group's FedWatch Tool indicates a nearly 98% probability of lower rates at the September 18 meeting, with another rate cut fully anticipated in December.

Supporting this outlook, Austan Goolsbee, President of the Chicago Federal Reserve Bank, expressed that the US economy seems to be reverting to a 2% inflation target following an earlier increase this year. His observations indicate growing confidence that the opportunity to reduce interest rates may be approaching.

Meanwhile, the economic recovery prospects in the Eurozone and signs of cooling in key US economic indicators may mitigate the ongoing disparity in monetary policy between the Fed and the ECB, occasionally supporting the EUR/USD pair in the near future. This perspective has gained traction pari passu rising expectations of Fed interest rate cuts.

Looking ahead, upcoming Fedspeak should dictate the pair’s price action as the trading week draws to a close.

EUR/USD daily chart

EUR/USD short-term technical outlook

EUR/USD is expected to face the next upward resistance at 1.0948 (July 17), followed by the March high of 1.0981 (March 8) and the psychological 1.1000 level.

If bears retake control, the pair may target the 200-day SMA of 1.0810 before sliding to the June low of 1.0666 (June 26). The loss of the May low of 1.0649 (May 1) leads to the 2024 bottom of 1.0601 (April 16).

Looking at the larger picture, it looks that further gains are on the way if the important 200-day SMA is surpassed on a convincing fashion.

So far, the 4-hour chart shows some loss of upside momentum for the time being. However, the initial resistance is 1.0948, before 1.0981 and 1.1000. On the other hand, the 55-SMA at 1.0872 comes first, followed by the 200-SMA at 1.0793, and then 1.0709. The relative strength index (RSI) dropped to about 47.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD: Extra gains need to clear 0.6400

AUD/USD: Extra gains need to clear 0.6400

AUD/USD rose for the third day in a row, approaching the key 0.6400 resistance on the back of the acute pullback in the US Dollar amid mounting recession concerns and global trade war fear.

AUD/USD News
EUR/USD: Powell and the NFP will put the rally to the test

EUR/USD: Powell and the NFP will put the rally to the test

EUR/USD gathered extra steam and advanced to multi-month peaks near 1.1150, although the move fizzled out somewhat as the NA session drew to a close on Thursday.

EUR/USD News
Gold holds positive ground above $3,100, all eyes on US NFP data

Gold holds positive ground above $3,100, all eyes on US NFP data

Gold price recovers some lost ground to near $3,115 during the late American session on Thursday after facing some profit-taking in the previous session. Escalating concerns over a global trade war and ongoing geopolitical risks boost the Gold price, a traditional safe-haven asset. 

Gold News
Ethereum: Short-term holders may not impact ETH's price, Pectra mainnet upgrade set for May 7

Ethereum: Short-term holders may not impact ETH's price, Pectra mainnet upgrade set for May 7

Ethereum declined by 3% on Thursday as market participants continued to react to President Donald Trump's announcements regarding reciprocal tariffs. However, the selling pressure may not persist since most ETH short-term holders already sold their assets in March.

Read more
Trump’s “Liberation Day” tariffs on the way

Trump’s “Liberation Day” tariffs on the way

United States (US) President Donald Trump’s self-styled “Liberation Day” has finally arrived. After four straight failures to kick off Donald Trump’s “day one” tariffs that were supposed to be implemented when President Trump assumed office 72 days ago, Trump’s team is slated to finally unveil a sweeping, lopsided package of “reciprocal” tariffs. 

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Majors

Cryptocurrencies

Signatures

Best Brokers of 2025