Market Analysis

EUR/USD\

Prediction: Increase

The EUR/USD pair is maintaining a short-term uptrend after breaking out of the consolidation zone around 1.0785 and advancing toward the recent high at 1.11433. Currently, the price is undergoing a technical correction toward the support zone between 1.09461 and 1.08747. However, the market structure remains intact with higher highs and higher lows, indicating that the bullish trend is still valid. Traders should closely monitor price action around the 1.094 area to assess the potential for a recovery and continuation of the upward momentum.

FUNDAMENTAL ANALYSIS

Monetary Policy and Fed Impact:

The US dollar is under pressure as the market increasingly expects the Fed to potentially begin cutting interest rates as early as May 2025, driven by concerns of a global economic slowdown stemming from escalating trade tensions.

Chicago Fed President Goolsbee stated that while “hard” data remains stable, uncertainty and business sentiment are becoming more fragile. Still, he emphasized that the Fed requires clearer data before taking action, suggesting that monetary policy remains in a wait-and-see stance.

The US 10-year Treasury yield has recovered to 4.216% after hitting a 6-month low — partially easing pressure on the USD, though not yet strong enough to reverse its short-term weakness. Trade Developments and Market Sentiment:

Trade tensions between the US, China, and the EU have escalated following President Trump's announcement of new tariffs on imports. Both China and the EU have responded strongly, threatening retaliatory measures.

The euro has benefited from expectations that the EU may reach a “no-tariff agreement” with the US or at least maintain a balanced counterposition — increasing demand for the euro as a relatively safe asset.

Meanwhile, the USD’s traditional “safe haven” appeal is weakening, as investors turn to alternative risk-off assets such as the Japanese yen (JPY) and Swiss franc (CHF).

Other Contributing Factors:

Market sentiment remains highly volatile, with the VIX index spiking as high as 60 — reflecting heightened investor sensitivity to news from the White House.

Asian equity markets have seen a slight recovery following a previous sell-off, indicating optimism that trade negotiations may resume.

TECHNICAL ANALYSIS

Key Resistance Levels

●       1.11433: Most recent swing high. A breakout above this level could open the path to

1.12753.

●       1.10089: Short-term resistance — a level that previously triggered a strong price reaction before the current correction.

Key Support Levels

●       1.09461: Immediate support — currently being tested. Holding this level could allow the bullish trend to continue.

●       1.08747: Aligns with the 89 EMA — a strong dynamic support level.

●       1.07851 – 1.07207: Strong support zone, overlapping with a previous supply zone and the 200 EMA. A break below this range could signal a trend reversal.

Technical Indicators:

RSI: Currently at 52.88, down from the overbought area (above 70), indicating that bullish momentum has cooled but no bearish divergence has emerged — suggesting potential for a rebound if support holds.

Volume: Strong volume during the prior upswing indicates capital inflow supporting the bullish trend.

Price Action:

●       Current price action suggests that the market is seeking balance around the 1.094 zone. If a bullish reversal candlestick pattern emerges here, it could present a potential buy signal.

EUR/USD is currently supported by both technical and fundamental factors: the short-term uptrend remains intact, while the USD continues to weaken due to recession risks and deteriorating sentiment.

Nonetheless, risks remain from unexpected developments in the ongoing trade conflict. Traders should maintain strict risk management and monitor White House developments and Fed commentary closely in the near term.

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