EUR/USD Struggles Below Key Support Level as USD Continues to Strengthen

EURUSD

Prediction: Decrease

EUR/USD remains in a downward correction, with three consecutive bearish sessions. Currently, the pair is fluctuating around the key support zone at 1.0429 - 1.0430, which coincides with the 34 EMA on the H4 chart. If this level holds, a short-term rebound may occur. However, the strengthening USD and macroeconomic risks could push EUR/USD to lower support levels.

FUNDAMENTAL ANALYSIS

Monetary Policy & Fed Impact

The USD continues to strengthen as a safe-haven asset amid geopolitical uncertainty. U.S. Treasury yields remain stable, but the 2-year vs. 10-year yield spread has increased slightly (+2bps), indicating that markets still expect the Fed to keep interest rates higher for longer.

Impact of Trump's Tariff Policies

Former President Donald Trump has announced plans for a 25% tariff on the auto, pharmaceutical, and semiconductor industries, triggering market concerns. Rising trade tensions are weighing on market risk sentiment, further strengthening the USD while pressuring the EUR.

European Bond Yields & Stimulus Measures

Eurozone bond yields have risen due to expectations of increased defense spending and a potential German stimulus package following last weekend’s elections. However, these factors have not been sufficient to offset selling pressure on EUR/USD, as the USD continues to benefit from safe-haven demand.

Geopolitics & Market Sentiment

Tensions between Trump and Ukrainian President Zelenskyy are escalating, creating uncertainty over U.S.-Ukraine relations, which supports safe-haven assets like USD and gold.

The European stock index (STOXX 600) recorded its biggest decline of the year, reflecting worsening risk sentiment.

Oil and natural gas prices have surged, reinforcing safe-haven flows into USD-denominated assets.

TECHNICAL ANALYSIS

Key Resistance Levels

● 1.0470 – Immediate resistance; if broken, EUR/USD could attempt a short-term recovery.

● 1.0507 – A more significant resistance; a breakout above this level could shift momentum back to a bullish trend.

Key Support Levels

● 1.0374 – The next support level if EUR/USD breaks below the current support zone.

● 1.0339 – A stronger support area that could trigger a potential rebound if the decline continues.

EMA 34 & EMA 89: The 34 EMA is converging towards the 89 EMA, indicating weakening bullish momentum. If the 34 EMA crosses below the 89 EMA, a clearer bearish signal will emerge.

RSI (47.61): The Relative Strength Index is below 50, suggesting that bearish momentum is still in play. If RSI drops below 40, selling pressure could intensify.

EUR/USD remains under pressure as macroeconomic risks and a strong USD drive the pair lower. A potential short-term rebound is possible near 1.0429 - 1.0430, but unless key resistance levels are breached, the downtrend is likely to continue.

 

 

 

 

 

 

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