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EUR/USD Price Forecast: Door remains open to extra gains near term

  • EUR/USD made a U-turn and approached the ley 1.1400 mark.
  • The US Dollar resumed its decline and hovered over three-year lows.
  • US Retail Sales surprised to the upside in March.

The Euro (EUR) managed to regain steam on Wednesday, revisiting the area of yearly peaks against the US Dollar (USD).

That said, EUR/USD managed to advance to the proximity of the key barrier at 1.1400 the figure, or two-day highs, on the back of the resumption of the bearish mood around the US Dollar.

On the latter, the US Dollar Index (DXY) quickly left behind Tuesday’s uptick and refocused on the area of multi-year troughs near the 9.30 zone amid diminishing US yields across different time frames.

Trade jitters appear unabated

Mounting worries over a potential global trade war remain front-and-centre for investors. President Trump intensified market anxiety by imposing a sweeping 10% tariff on all US trade partners starting April 5, in addition to extra duties ranging from 10% to 50% on specific nations and regions.

The European Union (EU) has been hit with a 20% tariff, and the White House confirmed tariffs of up to 145% against China.

Though Trump later introduced a 90-day pause on further tariffs for countries choosing not to retaliate—providing a momentary sense of relief—EU President Ursula von der Leyen cautioned that Brussels stands ready to respond if needed.

Adding another twist, Trump’s Sunday decision to exclude smartphones and computers from the China tariffs slightly bolstered risk sentiment.

Central banks remain prudent

Central banks remain a critical piece of the puzzle. The Federal Reserve (Fed) recently left interest rates unchanged, citing concerns over how these fresh tariffs could spur inflation amid an already moderating US economy.

Fed Chair Jerome Powell echoed a cautious view and hinted at an eventual easing path. In fact, traders now anticipate a full percentage point in rate cuts by year’s end, following unexpectedly soft inflation data in March.

At the Economic Club of Chicago on Wednesday, Chief Powell said that US economic growth appeared to be slowing, as he noted that consumer spending was growing modestly, a surge in imports to avoid tariffs was likely to weigh on GDP estimates, and overall sentiment was souring. He explained that, despite heightened uncertainty and downside risks, the US economy remained in a solid position.

Across the Atlantic, the European Central Bank (ECB) appears poised to reduce its benchmark rate by 25 basis points on Thursday. While ECB projections call for modest short-term growth and slight inflationary pressures through 2026, President Christine Lagarde warned that escalating trade disputes with the US could shave up to 0.5% off Eurozone GDP. Some within the ECB have suggested further policy moves might be necessary if trade tensions continue to mount.

Bulls’ bullish bets remain in place

On the positioning front, the latest CFTC data reveals that speculative net-long positions in the Euro have climbed to a two-week high of around 60K contracts. Meanwhile, hedge funds and other commercial players boosted their net-short holdings to nearly 90.5K contracts—also hitting a two-week peak. Open interest surged to multi-week highs, hovering near 700K contracts.

Technical overview

From a technical perspective, the first upside hurdle is the 2025 high of 1.1473 (April 11). A decisive break above this level could open the door to the 2022 peak of 1.1498 (February 19) and possibly clear the psychologically significant 1.1500 mark.

On the downside, initial support aligns with the 200-day Simple Moving Average (SMA) at 1.0750, followed by the weekly low of 1.0732 (March 27) and then the provisional 55-day SMA at 1.0713.

As for indicators, the Relative Strength Index (RSI) rose to around 73, while the Average Directional Index (ADX) past 44 suggests a moderately strong trend that continues to favour the bullish narrative.

EUR/USD daily chart

All in All

With the US Dollar’s momentum fading somewhat, the Euro is reclaiming lost ground even as trade frictions escalate. Both the Fed and the ECB are watching inflation data, growth signals, and new tariff announcements closely. While EUR/USD could be set for further gains, evolving risk sentiment and ongoing trade developments keep the potential for volatility firmly in play.

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Author

Pablo Piovano

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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