EUR/USD Price Forecast: Modest bounce, fears remain the same

EUR/USD Current price: 1.0438

• Geopolitical and fiscal woes undermine the market mood.
• FOMC Minutes showed officials would need inflation to fall further to cut rates.
• EUR/USD advances on Thursday, yet sellers retain control of the pair.

The EUR/USD pair found a near-term floor at 1.0400, Wednesday’s intraday low, and trades with a modest upward bias on Thursday. The US Dollar (USD) managed to advance throughout the first half of the week as geopolitical and fiscal concerns undermined the market mood.

United States (US) President Donald Trump threatened to add more tariffs to a slew of goods imported into the US, coming in the next month or so. Additionally, he announced reciprocal tariffs in the next few weeks, although no additional details have yet to come to light. On a positive note, Trump referred to a potential new trade deal with China, which somehow smoothed concerns and temporarily weighed on the USD.

The Federal Open Market Committee (FOMC) released the Minutes of its January meeting on Wednesday. The document showed policymakers unanimously decided to hold the policy rate steady at 4.25%-4.50%. Officials agreed they would need to see inflation easing further before trimming rates again while expressing concerns about the impact of tariffs on the economy.

Data-wise, the macroeconomic calendar has been quite light. The European Union (EU) published December Construction Output, which fell by 0.1% from a year earlier. Meanwhile, Germany published the January Producer Price Index (PPI), which rose a modest 0.5% on a yearly basis. Monthly wholesale prices slid 0.1% in the same month, lower than the 0.6% anticipated by market players.

After the American opening, the US will release weekly unemployment data and the February Philadelphia Fed Manufacturing Survey, while the EU will publish the preliminary estimate of February Consumer Confidence.

EUR/USD short-term technical outlook

From a technical point of view, the daily chart for the EUR/USD pair shows it hovers around 1.0440, with limited upward strength. The pair found support around a flat 20 Simple Moving Average (SMA), while a firmly bearish 100 SMA provides dynamic resistance at around 1.0550. Technical indicators, in the meantime, have turned marginally higher within neutral levels, not enough to anticipate another leg north.

In the near term, and according to the 4-hour chart, EUR/USD bullish potential is limited. Technical indicators advance but remain below their midlines. At the same time, a bearish 20 SMA provides near-term resistance at around 1.0450, while the 100 and 200 SMAs remain directionless below the current level. Overall, the pair would need to run past the aforementioned 1.0550 resistance area to recover its bullish tone, which is quite unlikely in the near term.

Support levels:  1.0410 1.0370 1.0320

Resistance levels: 1.0450 1.0485 1.0520