• EUR/USD faltered once again above the 1.0700 hurdle.
  • The Dollar staged a decent rebound amidst higher yields.
  • The focus now shifts to USD Q1 GDP and PCE.

The bullish performance of the US Dollar (USD) sparked a mild knee-jerk in EUR/USD, which failed to extend the recent recovery further north of the 1.0710-1.0715 band on Wednesday.

The uptick in the Greenback followed auspicious prints from the US docket, while investors continued to adjust to the potential timing of a Federal Reserve (Fed) rate cut, now anticipated to occur in September, although the possibility of a move in July hasn't been completely discarded.

The resurgence of bid bias in the US Dollar coincided with a similar bounce in US yields across various timeframes and a consistent narrative emphasizing the divergence in monetary policy between the Fed and other G10 central banks, particularly the European Central Bank (ECB).

In this context, recent statements from Board members leaned towards the ECB starting its easing cycle in June, with speculation circulating about three interest rate cuts (or 75 bos) for the remainder of the year. Conversely, the Fed is anticipated to implement its first interest rate reduction in September, although the possibility of a similar move in July cannot be entirely discounted.

Looking ahead, the relatively subdued economic fundamentals in the Eurozone, combined with the resilience of the US economy, reinforce expectations for a stronger Dollar in the medium term, especially considering the likelihood that the ECB may initiate rate cuts before the Fed. In such a scenario, EUR/USD is expected to experience a more pronounced decline in the relatively medium-term horizon.

In the domestic calendar, the Business Climate in Germany gathered extra pace in April, which added to investors’ optimism in the wake of the earlier release of encouraging PMIs.

EUR/USD daily chart

EUR/USD short-term technical outlook

On the upside, EUR/USD is projected to encounter early resistance at the crucial 200-day SMA of 1.0809, seconded by the April peak of 1.0885 (April 9), the March high of 1.0981 (March 8), and the weekly top of 1.0998 (January 11), all before hitting the psychological barrier of 1.1000.

Looking southwards, the breach of the 2024 low of 1.0601 (April 16) might signal a return to the November 2023 low of 1.0516 (November 1), which comes before the weekly low of 1.0495 (October 13, 2023). Once this area is reached, a visit to the 2023 bottom of 1.0448 (October 3) may begin to form before the round milestone of 1.0400.

The 4-hour chart indicates that the bullish trend has remained in place. The first up-barrier is at 1.0714, followed by the 100-SMA of 1.0727 and finally 1.0756. Meanwhile, the initial support is at 1.0601, followed by 1.0516. The Relative Strength Index (RSI) rose to the proximity of 59.

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

EUR/USD extends sideways grind below 1.0900

EUR/USD extends sideways grind below 1.0900

EUR/USD stays in a consolidation phase below 1.0900 following the previous week's rally. In the absence of high-tier data releases, the US Dollar stays resilient against its rivals as investors scrutinize comments from central bank officials. 

EUR/USD News

Gold retreated from record highs, maintains the upward bias

Gold retreated from record highs, maintains the upward bias

Gold rose sharply at the beginning of the week on escalating geopolitical tensions and touched a new all-time high of $2,450. With market mood improving modestly, XAU/USD erases a majority of its daily gains but manages to hold above $2,400.

Gold News

GBP/USD holds steady near 1.2700, Fedspeak in focus

GBP/USD holds steady near 1.2700, Fedspeak in focus

GBP/USD fluctuates in a narrow channel near 1.2700 on the first trading day of the week. The cautious market stance helps the US Dollar hold its ground, while market participants assess remarks from central bank officials ahead of this week's key events.

GBP/USD News

Ripple stays above $0.50 on Monday as firm backs research on blockchain and quantum computing

Ripple stays above $0.50 on Monday as firm backs research on blockchain and quantum computing

XRP price holds steady above the $0.50 key support level and edges higher on Monday, trading at 0.5130 and rising 0.70% in the day at the time of writing.

Read more

Week ahead: Nvidia results and UK CPI falling back to target

Week ahead: Nvidia results and UK CPI falling back to target

What a week for investors. The Dow Jones reached a record high and closed last week above 40,000, for the first time ever. This is a major bullish signal even though gains for global stocks were fairly modest on Friday, and European stocks closed lower. 

Read more

Majors

Cryptocurrencies

Signatures