- EUR/USD fades bounce off five-year low as the Fed week begins.
- Fed’s 0.50% rate hike is in the offing but USD bulls seek clues on balance-sheet normalization to dominate further.
- ECB’s de Guindos rules out July rate-hike concerns, Holzmann hints at rate hikes in summer or autumn.
- EU oil embargo on Russia, German Retail Sales and US ISM Manufacturing PMI to direct intraday moves.
EUR/USD rebound turns weary as traders brace for the much-awaited Fed verdict during the early hours of Monday’s Asian session. That said, the major currency pair portrayed the first positive daily close in seven the previous day but struggles around 1.0550-40 of late as market participants remain cautious ahead of the key event, as well as weigh the latest development as negative for the quote.
Although the US Dollar Index (DXY) eased from the five-year high on Friday, the EUR/USD prices portrayed a 100-pip worth of corrective pullback. Even so, the quote remains pressured around the lowest levels since 2017 as this week’s Federal Reserve (Fed) meeting and pre-NFP anxiety challenge the recovery moves.
Also weighing on the EUR/USD prices are the latest comments from the European Central Bank (ECB) policymakers, who raised economic concerns but deferred from Fed policymakers when it comes to rate hike signals. Recently, European Central Bank (ECB) Vice President Luis de Guindos said, “ECB rate hike possible but not likely in July,” per Bloomberg. On the same line was ECB Governing Board member Robert Holzmann who signaled rate hike in summer or autumn.
On the contrary, the Fed is all set to announce a 0.50% rate hike during Wednesday’s meeting. However, major attention will be given to the comments relating to the balance-sheet normalization and economic forecasts.
It’s worth noting that the fears of economic recession in the old continent, due to the Ukraine-Russia crisis, also weigh on the EUR/USD prices. Even so, the bloc remains sturdy to exert economic pressure on Moscow for its invasion of Kyiv. Recently, Germany’s energy security report signaled that the nation will end dependence on Russian oil by the end of this summer.
Other than the ECB and geopolitical crisis, China’s covid conditions and firmer US data, as well as reflation fears, also underpin the US dollar’s demand and praise the EUR/USD prices.
As a result, the EUR/USD pair may remain pressured but the cautious mood ahead of this week’s key events may restrict the downside moves. That said, today’s German Retail Sales for March and the US ISM Manufacturing PMI for April can offer intraday directions.
Also read: EUR/USD Weekly Forecast: Stairway to hell, NFP and Fed likely to fuel the current trend
Technical analysis
Friday’s corrective pullback couldn’t cross a downward sloping previous support line from November 2021, around 1.0590 by the press time, which in turn directs EUR/USD traders towards the latest multi-month low of 1.0471.
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
AUD/USD: Formidable resistance sits above 0.6500
AUD/USD reversed part of Tuesday’s pronounced recovery, coming under renewed downside pressure on the back of the late rebound in the US Dollar. The move higher in the Greenback was propped up by prospects of further progress on the trad front, while speculation kept pointing to a later-than-expected Fed rate cuts.
EUR/USD: Another drop to 1.1060 is not ruled out
EUR/USD rapidly faded its initial move to weekly highs around the 1.1270 zone on Wednesday, refocusing on the downside and approaching the 1.1160 region toward the closing bell on Wall Street. The pair’s pullback came on the back of the firm tone in the Greenback, which managed to regain balance and reverse initial losses, all ahead of Thursday’s release of US Retail Sales and the speech by the Fed’s Powell.
Gold looks consolidative below 3,200
Gold appears to have entered a brief consolidation phase below the $3,200 mark per troy ounce on Wednesday, following an earlier drop to five-week lows. The retreat came as investors continued to rotate out of the safe-haven asset, with growing optimism over trade developments driving steady selling in the metal.
$100M DeFi Development funding sends Solana price above 73-day resistance
Solana price surged past $184 on Wednesday, marking a 25% gain in May. The rally follows a fresh capital injection by DeFi Development, reaffirming institutional confidence in Solana’s blockchain ecosystem amid favorable macroeconomic signals.
US-China trade truce only emphasizes timeless investing truths
Markets roared back to life as the US and China hit pause on their escalating trade war, with both sides emphasizing mutual respect and dignity. But it wasn’t the fine print that moved markets—it was the mood shift. Investors rushed back into risk assets, betting that the worst might be behind us.
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.