EUR/USD on the Rise: Will It Break Key Resistance or Fall Back?

EUR/USD

Prediction: Increase

The EUR/USD pair experienced significant volatility, dropping sharply after the U.S. CPI data release but recovering notably, now trading around 1.04037. The short-term trend leans towards the upside, but key resistance levels must be monitored to confirm further bullish momentum.

FUNDAMENTAL ANALYSIS

Monetary Policy & Fed Impact

U.S. CPI data exceeded expectations, indicating persistent inflationary pressure, which may prompt the Federal Reserve (Fed) to keep interest rates higher for longer.

U.S. Treasury yields surged, with the 10-year yield reaching 4.66%, putting pressure on the USD while reducing 2025 rate cut expectations to just 28 basis points (equivalent to one rate cut).

Fed Chair Jerome Powell reiterated that the central bank is in no hurry to cut rates, reinforcing the strength of the USD in the near term.

Market Sentiment & Geopolitics

Reports of potential peace talks between Russia and Ukraine have supported the EUR. News of a phone call involving U.S. President Donald Trump, Russian President Vladimir Putin, and Ukrainian President Volodymyr Zelensky has sparked hopes for an end to the prolonged conflict.

Trump is expected to meet with Putin in Russia to initiate peace negotiations. If progress is made, this could provide further support for the EUR.

However, market caution remains, as peace terms may require significant concessions from Ukraine, potentially undermining investor confidence.

Commodity Market & Euro Impact

Oil prices have dropped over 2% amid hopes for peace in Ukraine, easing global inflationary pressures and potentially benefiting the Eurozone economy.

Gold prices continue to hover near record highs at $2,908, indicating that market sentiment remains uncertain.

TECHNICAL ANALYSIS

Key Resistance Levels

● 1.04294 – Immediate resistance; a breakout could extend gains toward 1.05001.

● 1.05001 – Strongest resistance within the current range; a break above this level could confirm a more sustainable bullish trend.

Key Support Levels

● 1.03749 – Nearest support; holding above this level could allow the uptrend to continue.

● 1.03398 – More significant support; a breakdown below this level could signal a return to a bearish trend.

● 1.02896 – Major support; losing this level would reinforce a stronger bearish move.

RSI: 58.53 – Trending upwards but not yet overbought (>70), suggesting bullish momentum remains intact.

EMA levels:

● Above EMA 34 & EMA 89 – Confirms ongoing bullish momentum.

● Testing EMA 200 – Market reaction at this level will determine whether the trend sustains.

Price Action:

● The price is currently reacting to the 1.04294 resistance level. A strong rejection herecould lead to a retest of 1.03749 support.

● If trading volume increases and the price breaks above 1.04294, the next target would be 1.05001.

EUR/USD has short-term bullish momentum but must break above 1.04294 to confirm further upside. Key market drivers include Fed policy, U.S. Treasury yields, and peace negotiations between Russia and Ukraine. Investors should monitor tomorrow’s U.S. PPI data, as a higher-than-expected reading could pressure EUR/USD lower due to expectations of prolonged high Fed interest rates. Developments in Russia-Ukraine peace talks will also have a direct impact on market sentiment and the currency pair’s direction.

 

 

 

 

 

 

 

 

 

 

Disclaimer

Derivative investments involve significant risks and may result in the loss of the capital you invest. You are advised to carefully read and study the legality of the company, products, and trading rules before deciding to invest your money. Be responsible and accountable in your trading.

RISK WARNING IN TRADING

Transactions via margin involve products that use leverage mechanisms, carry high risks, and are certainly not suitable for all investors. THERE IS NO GUARANTEE OF PROFIT on your investment, so be wary of those who guarantee profits in trading. You are advised not to use funds if you are not prepared to incur losses. Before deciding to trade, ensure that you understand the risks involved and also consider your experience.