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EUR/USD Price Forecast: Holding on to gains despite retreating

EUR/USD Current price: 1.1435

  • The ECB delivered a hawkish cut, temporarily boosting demand for the Euro.
  • US President Donald Trump’s action on Truth Social move markets back and forth.
  • EUR/USD holds on to intraday gains, aims for higher highs in the near term.

The EUR/USD pair settled around 1.1430 on Thursday, after flirting with the 1.1500 mark earlier in the day. The pair surged early in the American session, helped by encouraging Eurozone (EU) data, a hawkish cut from the European Central Bank (ECB) and another batch of disappointing United States (US) data.

The EU released the April Producer Price Index (PPI), which fell by 2.2% on a monthly basis, and rose by 0.7% from a year earlier. The figures were softer than the previous -1.7% and 1.9% respectively.

Across the pond, the US published Initial Jobless Claims, which jumped to 247K from the previous 239K, and Q1 Nonfarm Productivity, which fell 1.5%. Unit Labor Cost in the same period increased by 6.6%. Finally, the April Goods and Services Trade Balance, which posted a deficit of $-61.6 billion, much better than the anticipated $-94 billion.

The surprise, however, came for the ECB. The central bank lowered the three key interest rates by 25 basis points (bps) each as expected. With this decision, the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.15%, 2.4% and 2%, respectively. The accompanying statement was mostly dovish, yet President Christine Lagarde dropped some hawkish lines within her press conference that boosted the EUR.

Among other things, Lagarde mentioned the nearby end of the current monetary policy cycle. Even further, she sounded optimistic about economic progress. Indeed, she acknowledged the risks related to tariffs, but by the end of the event, the odds for additional ECB rate cuts were sharply down.

Meanwhile, the market’s mood temporarily improved after US President Donald Trump said he had a long talk with his Chinese counterpart, Xi Jinping, and anticipated a new round of trade talks. The sentiment flipped to negative amid fresh tensions between Trump and his former friend Elon Musk. Musk opposed Trump’s One Big Beautiful Bill, calling it an abomination and left the government last week. Both take in at each other on social media, causing TSLA shares to drop over 16% on a daily basis, weighing on Wall Street.

The week will end with the release of the US Nonfarm Payrolls report, scheduled for Friday. The country is expected to have added 130K new job positions in May, while the Unemployment Rate is foreseen steady at 4.2%.

EUR/USD short-term technical outlook

The EUR/USD pair trades around 1.1430, and despite the intraday retracement, the risk remains skewed to the upside, according to technical readings in the daily chart. EUR/USD holds above all its moving averages, with the 20 Simple Moving Average (SMA) turning modestly higher at around 1.1290 and well above the longer ones. The 100 SMA, in the meantime, extends its advance beyond a flat 200 SMA, in line with higher highs. Finally, Technical indicators aim north above their midlines, also supporting additional gains ahead.

In the near term, and according to the 4-hour chart, EUR/USD has lost its positive momentum, but the downside remains well-limited. The pair develops above a flat 20 SMA, which hovers at around 1.1410, while a bullish 100 SMA is about to cross above a flat 200 SMA in the 1.1310 price zone. In the meantime, technical indicators hold well-above their midlines, although the Relative Strength Index (RSI) indicator turned modestly lower, reflecting the latest intraday slide.

Support levels: 1.1410 1.1375 1.1330

Resistance levels: 1.1460 1.1505 1.1550

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Author

Valeria Bednarik

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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