EUR/USD Forecast: Fed Policies Support Gains, ECB Limits Upside

EUR/USD

Prediction: Increase

EUR/USD is showing signs of recovery as the USD weakens due to lower U.S. Treasury yields and expectations that the Fed will maintain interest rates. However, ECB’s monetary policy stance may limit the upside potential.

FUNDAMENTAL ANALYSIS

Monetary Policy and Fed Impact

The Fed is likely to keep rates unchanged for now, with market expectations of a total 45-basis-point cut this year. U.S. Treasury yields have fallen to their lowest level in over a month, reducing the attractiveness of the USD. 

ECB’s Monetary Policy

The ECB maintains a tight monetary policy but may consider easing if economic growth in the Eurozone weakens.

Impact of Other Currencies

The Japanese Yen is strengthening as expectations grow that the BOJ will continue raising interest rates.

The Bank of England (BoE) may cut interest rates, influencing the overall trend of major currencies.

The PBOC is holding the Yuan stable, helping to maintain stability in Asian currency markets.

Macroeconomic and Trade Risks

The USD is weakening as trade war risks diminish, creating a favorable environment for the EUR.

The Reserve Bank of India (RBI) may ease its control over the Rupee, leading to depreciation and indirectly affecting capital flows in the forex market.

TECHNICAL ANALYSIS

Key Resistance Levels

● 1.0403 (200 EMA): A crucial level; breaking above it could open the way for a move toward 1.04326 - 1.05001.

● 1.04326 - 1.04500: Bearish order block, likely to face strong selling pressure.

Key Support Levels

● 1.03749 (89 EMA): Losing this level could trigger a downturn.

● 1.03398 - 1.02896: Next critical support zone.

● 1.02221 - 1.01766: Deeper support area in case of a strong decline.

RSI: 53.81 on the H4 chart, indicating a consolidation phase before a clear trend emerges.

EMA Trends:The 34 EMA (green) and 89 EMA (yellow) are crossing near the current price, signaling potential trend reversal or sideways  movement. The 200 EMA (dark blue) remains above the price, acting as dynamic resistance. 

The weakening USD, driven by lower Treasury yields and Fed policies, supports EUR/USD’s upside potential. However, the ECB’s stance on  monetary policy may act as a limiting factor. Traders should closely monitor macroeconomic  developments and price action before making trading decisions.

 

 

 

 

 

 

 

 

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