- EUR/USD lacks any firm intraday direction and oscillates in a range on Tuesday.
- Bets that the ECB is done hiking rates act as a headwind for the shared currency.
- Subdued US Dollar price action is seen as a key factor lending support to the pair.
- Traders seem reluctant and prefer to wait for the FOMC decision on Wednesday.
The EUR/USD pair struggles to capitalize on its recent recovery gains registered over the past two days and oscillates in a narrow band during the Asian session on Tuesday. Spot prices currently trade just below the 1.0700 round-figure mark and remain well within the striking distance of a six-month low touched in the aftermath of the dovish European Central Bank (ECB) rate decision last Thursday.
The ECB opted to hike rates for the 10th straight time, by 25 bps, taking its main rate to an all-time high level of 4% to counter stubbornly high inflation. In the accompanying monetary policy statement, the central bank, however, sent a clear message that the 14-month-long policy tightening cycle could have reached its peak already. Furthermore, the downgrading of CPI and GDP growth forecasts for the coming years – 2024 and 2025 – reaffirmed expectations that further hikes may be off the table for now. This, in turn, is seen acting as a headwind for the shared currency, though a softer tone surrounding the US Dollar (USD) continues to lend some support to the EUR/USD pair.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, remains depressed below its highest level since March set last week as traders seem reluctant to place fresh bullish bets ahead of the key central bank event risk. The Federal Reserve (Fed) is scheduled to announce the outcome of the highly-anticipated two-day monetary policy meeting on Wednesday and is widely expected to stand path. That said, the markets are still pricing in the possibility of one more 25 bps lift-off by the end of this year. The bets were lifted by resilient US macro data released recently and still-sticky inflation, which should allow the Fed to keep interest rates higher for longer.
Hence, investors will keep a close eye on the so-called ‘dot plot’ and inflation expectations. Apart from this, Fed Chair Jerome Powell's remarks at the post-meeting press conference will be scrutinized closely for fresh cues about the future rate-hike path. This, in turn, will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for the EUR/USD pair. Heading into the key central bank event risk, the final Euro Zone CPI print might provide some impetus ahead of the US housing market data – Building Permits and Housing Starts. The aforementioned fundamental backdrop, meanwhile, seems tilted in favour of bullish traders.
Hence, any subsequent move up might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly. Bearish traders, however, might wait for weakness below the 1.0635-1.0630 region before positioning for an extension of a two-month-old downtrend from the 1.1275 zone, or a 17-month top touched in July. The EUR/USD pair might then turn vulnerable to accelerate the fall towards challenging the YTD low, around the 1.0480 area set in January.
Technical levels to watch
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
Editors’ Picks
EUR/USD stabilizes above 1.1350 on Easter Friday
EUR/USD enters a consolidation phase above 1.1350 on Friday as the trading action remains subdued, with major markets remaining closed in observance of the Easter Holiday. On Thursday, the European Central Bank (ECB) announced it cut key rates by 25 bps, as expected.
GBP/USD fluctuates below 1.3300, looks to post weekly gains
After setting a new multi-month high near 1.3300 earlier in the week, GBP/USD trades in a narrow band at around 1.32700 on Friday and remains on track to end the week in positive territory. Markets turn quiet on Friday as trading conditions thin out on Easter Holiday.
Gold ends week with impressive gains above $3,300
Gold retreated slightly from the all-time high it touched at $3,357 early Thursday but still gained more than 2% for the week after settling at $3,327. The uncertainty surrounding US-China trade relations caused markets to adopt a cautious stance, boosting safe-haven demand for Gold.
How SEC-Ripple case and ETF prospects could shape XRP’s future
Ripple consolidated above the pivotal $2.00 level while trading at $2.05 at the time of writing on Friday, reflecting neutral sentiment across the crypto market.
Future-proofing portfolios: A playbook for tariff and recession risks
It does seem like we will be talking tariffs for a while. And if tariffs stay — in some shape or form — even after negotiations, we’ll likely be talking about recession too. Higher input costs, persistent inflation, and tighter monetary policy are already weighing on global growth.
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.