CFD Trading Rate Euro vs US Dollar (EURUSD)

• EUR/USD could test the support at the psychological level of 1.0600.
• The pair could extend losses to November’s low at 1.0516 as Technical analysis suggests a bearish confirmation.
• The area around the major level of 1.0650 and the 23.6% Fibo level of 1.0672 appears as the resistance zone.

EUR/USD continues its losing streak for the sixth successive session on Tuesday, hovering near 1.0620 during the Asian trading hours. The US Dollar's (USD) strength put pressure on the EUR/USD pair, possibly driven by increased US Treasury yields. Additionally, stronger-than-anticipated Retail Sales data from the US has raised expectations that the Federal Reserve (Fed) might prolong its stance on higher interest rates.

On the technical side, the analysis suggests a bearish sentiment for the EUR/USD pair as the 14-day Relative Strength Index (RSI) is positioned below the 50 mark. Additionally, the lagging indicator, Moving Average Convergence Divergence (MACD), lies below the centreline and shows a divergence below the signal line, which indicates weakness for the pair.

The EUR/USD pair could find immediate support around the psychological level of 1.0600. A break below this level could exert downward pressure on the pair to navigate the region around the major level of 1.0550, followed by November’s low at 1.0516.

On the upside, the major level 1.0650 appears as the key barrier, followed by the 23.6% Fibonacci retracement level of 1.0672. A breakthrough above the latter could lead the EUR/USD pair to explore the area around the psychological level of 1.0700 and the nine-day Exponential Moving Average (EMA) at 1.0715.

EUR/USD: Daily Chart

• EUR/USD extends its losing streak as the Fed is expected to maintain higher interest rates for an extended period.
• US Retail Sales (MoM) experienced a 0.7% increase in March, against the expected 0.3% and 0.9% prior.
• The dovish remarks from the ECB’s officials contribute to downward pressure on the Euro.

EUR/USD continues to lose ground for the sixth successive session, trading near 1.0610 during the Asian hours on Tuesday. The elevated US Dollar (USD) is exerting pressure on the EUR/USD pair, potentially influenced by the higher US Treasury yields. Furthermore, better-than-expected Retail Sales figures from the United States (US) have amplified expectations that the Federal Reserve (Fed) may maintain higher interest rates for an extended period.

US Dollar Index (DXY) extends its gains to near 106.20, with 2-year and 10-year yields on US Treasury bonds standing at 4.92% and 4.60%, respectively, at the time of writing. Escalating geopolitical tensions in the Middle East are prompting investors to flock towards the safe-haven US Dollar (USD) as a refuge.

US Retail Sales (MoM) increased by 0.7% in March, exceeding the market expectations of 0.3%. The previous reading was revised to 0.9% from 0.6% in February. Retail Sales Control Group rose by 1.1% against the previous increase of 0.3%.

Federal Reserve (Fed) Bank of San Francisco President Mary Daly recently stated that while there has been notable progress on inflation, there is still further ground to cover. She emphasized the importance of being confident that inflation is on a path toward the target before taking action. Daly also highlighted that the economy is experiencing solid growth, the labor market remains robust, and inflation is currently above the target level.

The Euro depreciates following dovish remarks from European Central Bank (ECB) officials on Monday. Gediminas Šimkus, a member of the ECB Governing Council, stated that there is a greater than 50% likelihood of witnessing more than three rate cuts this year, according to Reuters.

Additionally, ECB Chief Economist Philip Lane highlighted that there has been notably less progress concerning domestic inflation compared to broader inflation measures. Despite potential near-term fluctuations in the inflation outlook, the projected convergence of inflation to the target by 2025 remains supported.

• The Euro resumes its decline following strong US Retail Sales data
• The divergence between the ECB and the Fed's rate outlook is expected to weigh on the Euro.
• Geopolitical concerns are an additional support for the safe-haven USD.

The Euro’s mild upside bias seen during Monday’s European session has been hammered during US trading. The release of better-than-expected US Retail Sales has pushed US Treasury yields to fresh mid-term highs, bringing the US Dollar up with them.

Data released by the US Commerce Department revealed that retail consumption increased by 0.7% in March from 0.9% in February, beating expectations of a 0.3% rise. Excluding autos, total retail and food sales increased 1.1%, their best reading since January 2023.

Fed and ECB’s monetary divergence is weighing on the Euro

These figures highlight the strong US economic outlook and endorse the view that the Fed will have to keep rates at high levels for a longer time. This is underpinning demand for the USD.

The Eurozone context is the polar opposite, with inflation trending lower and the economy stalling. This has prompted the ECB to hint towards interest rate cuts, probably in June, putting the European Central Bank in the pole position for monetary easing and weighing on demand for the Euro.

Beyond that, investors’ concerns about an escalation of the Middle East conflict, as Israel weighs the options to retaliate from Iran’s missile attack is an additional support for the safe-haven US Dollar.

• EUR/USD is expected to witness more downside as the appeal for the US Dollar strengthens.
• Fed Daly said there is absolutely no urgency for the Fed to pivot to rate cuts.
• The ECB is expected to begin reducing interest rates from the June meeting.

The EUR/USD pair sees more downside below the immediate support of 1.0620 in Monday’s early American session. The major currency pair weakens as robust spending by United States households at retail stores in March has improved the US Dollar’s appeal.

The US Census Bureau reported that monthly Retail Sales grew strongly by 0.7% from expectations of 0.3%. In February, Retail Sales data rose by 0.9%, upwardly revised from 0.6%. The Retail Sales data is one of leading indicators of consumer spendings, which accounts for more than two-thirds of the US economy. Higher spending by households indicates a stubborn inflation outlook.

Upbeat Retail Sales data would allow Federal Reserve (Fed) policymakers to keep the monetary policy stance restrictive for a longer period.

Fed policymakers have been reiterating the need for maintaining interest rates higher until they get convinced that inflation will return to the desired rate of 2%. San Francisco Fed Bank President Mary Daly said on Friday that there is absolutely no urgency to start reducing interest rates. Daly added that there is still more work to do to make sure that inflation is on course to return to the desired rate of 2%.

In Monday’s early New York session, New York President John Williams said he is more optimistic about potential growth but see rate cuts starting later this year.

On the Eurozone front, European Central Bank (ECB) policymaker Peter Kazimir see possibility of rate cuts starting from the June meeting if inflation continues to fall. For the longer-term outlook, Kazmir said the ECB is not committed to any policy path beyond June, noting that they must maintain flexibility.

Last week, the ECB kept its Main Refinancing Operations Rate unchanged at 4.5% as expected. In a monetary policy conference, ECB President Christine Lagarde said if a fresh assessment increase policymakers' confidence that inflation is heading back to target, then it "would be appropriate" to cut interest rates, Reuters reported.

• EUR/USD rebounds from five-month lows despite hawkish tone surrounding the Fed’s monetary policy outlook.
• ECB member Gediminas Šimkus indicated that there is a probability of more than 50% for more than three rate cuts to occur in 2024.
• Traders may seek refuge in the safe-haven US Dollar due to escalated tensions in the Middle East.

EUR/USD rebounds from a five-month low of 1.0622 reached last Friday, hovering around 1.0660 during early European trading hours on Monday. The EUR/USD pair faced downward pressure as the European Central Bank (ECB) and the Federal Reserve (Fed) revealed diverging monetary policy outlooks.

Investors await the release of Eurozone Industrial Production data for March on Monday. Furthermore, the investors’ focus will shift to US Retail Sales figures due to be released later in the day.

The ECB signaled that if underlying inflation continues to decelerate as anticipated, there's a possibility of contemplating a reduction in policy rates in June. Meanwhile, the Federal Reserve (Fed) appears to be reassessing its monetary easing strategies in light of persistent US inflation and strong macroeconomic indicators. Thursday's data revealed that core producer inflation in the United States (US) surged year-over-year in March, surpassing expectations for the increase.

Traders adopt a cautious approach amidst heightened geopolitical tensions, which may prompt them to seek refuge in the safe-haven US Dollar (USD), potentially putting pressure on the EUR/USD pair. There's the possibility of Israel retaliating against Iran's attack. On Saturday, Iran launched explosive drones and missiles targeting military installations in Israel. Israel successfully intercepted most of the incoming projectiles, according to Reuters.

On Monday, Gediminas Šimkus, a member of the European Central Bank (ECB) Governing Council, stated that there is a greater than 50% likelihood of more than three rate cuts occurring this year, as per Reuters. Šimkus also mentioned that geopolitical events, such as an escalation of the Israel-Iran conflict, could potentially postpone the first rate cut to July from June.

• EUR/USD attempts to recover from five-month lows amid escalated Middle-East tension.
• Iran launched explosive drones and missiles at Israel late Saturday.
• The pair received downward pressure by diverging policy scenarios for the ECB and Fed.

EUR/USD edges up to near 1.0650 during the Asian session on Monday, recovering from a five-month low of 1.0622 reached last Friday. The US Dollar (USD) gained ground due to increased dollar-buying due to geopolitical turmoil, which contributed to downward pressure on the EUR/USD pair.

Over the weekend, Iran retaliated against a suspected Israeli attack on its consulate in Syria by launching explosive drones and missiles at Israel. Despite this escalation, the markets remained relatively calm, possibly due to Iran's advance notice of the attack, which helped mitigate the risk of further escalation.

According to reports from Reuters, officials from Turkey, Jordan, and Iraq stated that Iran had provided advanced notice days before the attack, allowing measures to prevent mass casualties and a worsening of the situation. However, a US official denied this claim. Additionally, US President Joe Biden told Israel that the United States would not participate in any retaliatory actions.

The EUR/USD pair faced downward pressure as the European Central Bank (ECB) and the Federal Reserve (Fed) revealed diverging monetary policy outlooks. The ECB indicated that if underlying inflation continues to slow as expected, there could be a consideration to lower policy rates in June.

In contrast, robust US inflation and strong macroeconomic indicators are prompting the Fed to reconsider its plans for monetary easing. The probability of interest rates remaining unchanged at the June meeting has increased to 63.5% according to the CME FedWatch Tool, up from 46.8% the previous week. Investors will closely monitor seasonally adjusted Eurozone Industrial Production data and US Retail Sales figures on Monday.

Boston Federal Reserve (Fed) President Susan Collins remarked on Friday that she anticipates 'around two' rate cuts for 2024, while still expecting inflation pressures to diminish later this year. She emphasized the uncertainty surrounding the timing of potential rate cuts and noted that while a rate hike is not currently part of the baseline scenario, it cannot be entirely ruled out.

• The Euro dives on a combination of a dovish ECB and a hawkish Fed
• The pair is on track to its weakest weekly performance in more than one year.
• Upside attempts are expected to be limited below 1.0725 and 1.0755.

The Euro has been falling like a stone over the last two days, crushed by the combination of a hawkish Federal Reserve and a dovish European Central Bank. The pair has lost nearly 2% in the last three days and is set to close its worst weekly performance in more than one year.

The ECB left rates unchanged at the 4% level in a contested decision, as some committee members were in favour of a rate cut. This, and the dovish tilt on the monetary statement has boosted expectations that the bank will start easing its monetary policy soon. Investors have marked June in their calendars.

This would put the ECB on the unprecedented position of shifting its monetary policy ahead of the Federal Reserve. The Fed is in a polar opposite, as the shock of the US inflation and the strong macroeconomic data is forcing the bank to dial down its monetary easing plans.

In this scenario, it is difficult to see any support for the Euro. The pair might see some correction from strongly oversold levels on intra-day charts, although upside attempts are expected to be limited. Supports are 1.0630 and 1.0525. Resistances lie at 1.0725 and 1.0755.

• EUR/USD slumps to 1.0660 as ECB rate cut bets for June strengthen.
• The US Dollar strengthens as the Fed is anticipated to start reducing interest rates later this year.
• Investors shift focus to the US Retail Sales data that will be published on Monday.

The EUR/USD pair extends its downside to near five-month low around 1.0660 in Friday’s European session. The major currency pair falls sharply on firm speculation that the European Central bank (ECB) will begin reducing interest rates from the June meeting.

The ECB kept its key borrowing rates unchanged on Thursday at 4.5% to maintain downward pressure on the consumer price inflation. In the monetary policy statement, the ECB said that restrictive financial conditions and interest rate hikes yet made are weighing on the overall demand and pushing downward pressure on inflation.

Also, the ECB said that it will remain data-dependent to determine how long interest rates are needed to remain restrictive. The central bank refrained from committing to any particular rate path.

The speculation for ECB pivoting to rate cuts from June strengthen after ECB President Christine Lagarde said that if a fresh assessment increased policymakers' confidence that inflation is heading back to target, then it "would be appropriate" to cut interest rates, Reuters reported.

Meanwhile, the market sentiment is downbeat as traders pare big bets leaning to Federal Reserve (Fed) beginning to reduce interest rates from the June meeting. S&P 500 futures have posted losses in the European session. 10-year US Treasury yields falls slightly after refreshing more than four-month high near 4.60%. The US Dollar Index (DXY), which tracks the US Dollar’s value against six major currencies, jumps to near five-month high around 106.00.

Going forward, investors will shift focus to the monthly Retail Sales data, which will be published on Monday. The Retail Sales data is a leading indicator of consumer spending. Higher Retail Sales suggests robust consumer spending, which leads to a stubborn inflation outlook.

• EUR/USD remains on the defensive around 1.0728 in Friday’s early Asian session. 
• US PPI figure rose 0.2% MoM in March, compared to the 0.3% estimate; yearly PPI climbed 2.1%, the biggest gain since April 2023. 
• The ECB held its key interest rates steady at 4.0% for a fifth straight meeting on Thursday, as widely expected. 

The EUR/USD pair trades with a negative bias near 1.0728 on Friday during the early Asian session. The modest recovery in the US Dollar (USD) amid the rising speculation of a Fed rate cut in September weighs on the major pair. On Thursday, the European Central Bank (ECB) held interest rates steady at a record high as expected and opened the door to a rate cut in June. Investors await the German March inflation data and the preliminary US Michigan Consumer Sentiment, due on Friday.

A measure of US inflation at the wholesale level came in softer-than-expected in March, boosting hopes for rate cuts from the Federal Reserve (Fed) this year. The US Producer Price Index (PPI) rose 0.2% MoM in March, compared to the 0.3% estimate. Annually, the PPI jumped 2.1% YoY in the same period, the biggest gain since April 2023. Additionally, the Core PPI, excluding food and energy, increased 2.4% YoY, beating market expectations, according to the Bureau of Labor Statistics on Thursday.

The report had little impact on the market. Investors are now pricing in only two rate cuts this year, which will most likely begin in September, according to CME FedWatch Tool. The FOMC minutes released on Wednesday showed that participants noted their uncertainty about the elevated high inflation and recent data had not increased their confidence that inflation was moving sustainably down to 2%," according to the minutes.

Across the pond, the ECB held its key interest rates steady at 4.0% for a fifth straight meeting on Thursday. The central bank also hinted about an upcoming rate cut, despite uncertainty over the Fed's next moves. The markets have priced in a 25 basis points (bps) rate cut from the ECB in June, according to LSEG data. The growing speculation that the ECB would cut its rate before the US Fed exerted some selling pressure on the Euro (EUR) and acts as a tailwind for the EUR/USD pair. 

• EUR/USD prints a fresh monthly low at 1.0720 after the ECB holds key rates steady.
• ECB Lagarde didn’t provide cues about when the central bank could pivot to rate cuts.
• The US Dollar strengthens as investors don’t see the Fed reducing rates soon.

The EUR/USD pair falls further to 1.0720 in Thursday’s early New York session after the European Central Bank (ECB) decided to hold its Main Refinancing Operations Rate steady at 4.5%. The ECB was widely anticipated to keep its borrowing rates higher to maintain downward pressure on the consumer price inflation.

In the monetary policy statement, the ECB commented that restrictive financial conditions and interest rate hikes yet made are weighing on overall demand and pushing downward pressure on inflation. The ECB denied committing to any particular rate path and said it would remain data-dependent to determine how long interest rates need to remain restrictive.

In the press conference, ECB President Christine Lagarde warned that the economy is weak and risks to growth have tilted to the downside. Lagarde added that labour market conditions are continuously easing, and demand for the manufacturing sector is weak. She is confident that inflation will decline to target next year, which is 2%. ECB Lagarde didn’t comment on when the central bank could start reducing interest rates.

The strong US Dollar also drives the weakness in the major currency pair. The US Dollar Index (DXY), which tracks the US Dollar’s value against six major currencies, hovers near more than a four-month high of around 105.20. The appeal for the US Dollar strengthens as traders push back market expectations to Federal Reserve (Fed) rate cuts. The Fed is expected to keep interest rates in the range of 5.25%-5.50% at least till the September meeting, as the United States consumer price inflation for March turned out stronger than expected.

Meanwhile, the US Bureau of Labor Statistics (BLS) has reported hot annual core Producer Price Index (PPI) data for March. US core PPI grew strongly by 2.4% from estimates of 2.3% and the prior reading of 2.0%.

• EUR/USD attracts some sellers near 1.0745 on the firmer USD on Thursday. 
• The pair resumes its bearish stance below the key EMA, with an oversold RSI condition.
• The key support level is seen at the 1.0725–1.0730 zone; the first upside target is located at 1.0800.

The EUR/USD pair loses traction around 1.0745 on Thursday during the early European session. The hotter-than-expected US inflation data boosted the Greenback to yearly highs and exerted some selling pressure on the EUR/USD pair. The European Central Bank (ECB) interest rate decision will be the highlight later on Thursday, which is expected to leave interest rates steady at a record high.  

From a technical perspective, EUR/USD resumes its bearish outlook as the major pair is below the key 100-period Exponential Moving Average (EMA) on the four-hour chart. The downward momentum is confirmed by the Relative Strength Index (RSI), which holds in bearish territory below 50. Nonetheless, the oversold RSI condition indicates that further consolidation cannot be ruled out before positioning for any near-term EUR/USD depreciation.

The confluence of the lower limit of the Bollinger Band and a low of October 10 at the 1.0725–1.0730 region acts as a crucial support level for EUR/USD, Any follow-through selling will see a drop to the 1.0700 psychological level. The additional downside filter to watch is a low of November 9, 2023 at 1.0660, followed by a low of November 3, 2023 at 1.0615.

On the upside, the first upside barrier will emerge near a low of March 22 and the round figure at 1.0800. Further north, the next target is seen around the 100-period EMA at 1.0825. A break above the latter will pave the way to a high of April 9 at 1.0885, en route to the upper boundary of the Bollinger Band at 1.0920. 

EUR/USD four-hour chart

• EUR/USD remains under pressure around 1.0740 on the stronger USD on Thursday. 
• The ECB is widely expected to leave interest rates unchanged at its April meeting on Thursday. 
• The US CPI figure rose 0.4% MoM in March, compared with the 0.3% gain estimated.

The EUR/USD pair remains on the defensive near 1.0740 during the early Asian session on Thursday. An unexpected rise in US CPI inflation data in March propelled the US Dollar (USD) to yearly highs and weighed on the major pair. Investors will closely monitor the European Central Bank (ECB) interest rate decision and press conference later on Thursday, along with the release of the US Producer Price Index (PPI) report. 

The ECB is anticipated to keep interest rates steady at a record high at its April meeting on Thursday, but ECB President Christine Lagarde is likely to discuss about inflation data and the possibilities of a June rate cut. The Federal Reserve (Fed) might delay the easing cycle this year due to the robust economy and upside surprises in inflation. The ECB insists on setting policy independently, but the divergence of interest rates between the Fed and ECB might exert some selling pressure on the Euro (EUR) and create a headwind for the EUR/USD pair. 

An unexpected rise in the US inflation data in March triggered speculation that the US central bank would delay cutting the interest rate. The Greenback rose to fresh yearly highs north of 105.30 after the data. The US Consumer Price Index (CPI) rose 0.4% MoM in March, compared with the 0.3% gain estimated. On an annual basis, the CPI climbed 3.5% YoY versus the expectation of a 3.4% rise, according to the Labor Department on Wednesday. 

The Core CPI figure, excluding volatile food and energy, jumped 0.4% MoM in March, compared with the market consensus of a 0.3% rise. Meanwhile, the Core figure grew by 3.8%, against the expectation of a 3.7% increase. Later on Thursday, the US Producer Price Index for March and weekly Initial Jobless Claims will be due. Also, the Fed’s Williams, Collins, and Bostic are set to speak.

• US headline and core CPI exceeded expectations, rising to 3.5% and 3.8% respectively in March.
• FOMC minutes from March highlighted uncertainty about the persistence of high inflation and the efficacy of monetary policy.

The EUR/USD pair declined to 1.0739, representing a substantial decline of 1.1%. This decline has occurred following the release of hot inflation figures from the US which fueled hawkish bets on the Federal Reserve (Fed). The Federal Open Market Committee (FOMC) minutes from the March meeting didn’t trigger any reaction.

The US Bureau of Labor Statistics (BLS) revealed on Wednesday that the nation's inflation rate, reflected by the Consumer Price Index (CPI), increased from 3.2% in February to 3.5% in March on an annual basis. This outstripped the predicted market forecast of 3.4%. The yearly core CPI, which omits fluctuating food and energy costs, mirrored February's growth by rising 3.8%. Both the CPI and the core CPI climbed by 0.4% monthly, exceeding analysts' projection of 0.3%. As a reaction, US Treasury yields soared while the odds of a June Rate cut by the Fed declined to over 20%. The mix of hawkish bets as rising yields benefited the USD during the session.

On the other hand, the FOMC Minutes disclosed a general lack of assurance amongst participants concerning the persistence of high inflation rates, with recent data failing to bolster their trust in the economy cooling down and t in the inflation rate steadily reaching the 2% benchmark. With inflation running hot as well as the labor market, officials may change their language and slowly give up on the chances of a June rate cut by the Fed.

EUR/USD technical analysis

On the daily chart, the Relative Strength Index (RSI) fell within negative territory, with the latest reading at 38. This deviation from a positive trend suggests a shift in market dominance towards the sellers. Along with the RSI, the Moving Average Convergence Divergence (MACD) displayed a fresh red bar, indicating negative market momentum.

In the broader outlook, the EUR/USD also exhibits a bearish trend as it is positioned below key Simple Moving Averages (SMAs). SMAs are tools used to smooth out significant price data fluctuations over specific time periods to discern market trends. Specifically, today it fell below the 200-day SMA, typically considered a long-term trend indicator.

• EUR/USD is trading in a narrow range ahead of the US Consumer Price Index data for March. 
• The pair is trading in a space between the 50, 100 and 200-day Simple Moving Averages.   
• The ECB meeting on Thursday is likely to bring volatility to EUR/USD. 

EUR/USD is trading in the 1.0850s on Wednesday, little changed from the previous day’s close as traders await key macroeconomic data from the US in the form of the Consumer Price Index (CPI) for March, which will be released at the start of the US session.

EUR/USD could breakout after CPI data 

EUR/USD could see a lift in volatility from the CPI data if it deviates significantly from expectations. 

Economists estimate that the data will show prices in the US to have risen by 3.4% Year-over-Year in March and 3.7% YoY for core goods, which excludes volatile food and energy prices. 

Results in line with expectations would still indicate an inflation rate well above the Federal Reserve’s (Fed) 2.0% target. A greater decline would be required before the Fed is likely to bring down interest rates from their current 5.5% level.  

In contrast to the Fed, the European Central Bank (ECB) is seen as more likely to cut interest rates earlier amid more subdued growth and inflation expectations. 

For EUR/USD, the maintenance of higher interest rates in the US compared to the Eurozone is a bearish factor. This is because relatively higher interest attracts foreign capital inflows, favoring the US Dollar in this case. 

ECB meeting on the horizon

EUR/USD could experience further volatility on Thursday after the European Central Bank (ECB) holds its April policy meeting.  

A few ECB members, such as the President of the Banque de France, François Villeroy de Galhau have mentioned April as a possible time for the ECB to implement a first interest-rate cut.  

The majority of ECB members, however, think April is too early because the ECB will not yet have the latest wage data at hand, and wage inflation is seen as a critical input into their inflation models and decision-making process.

EUR/USD, however, could still be moved if the language in the accompanying statement suggests a higher probability of the ECB making an interest-rate cut in June.  

Technical Analysis: EUR/USD increasingly looking range-bound

EUR/USD appears trapped within the pincers of three significant Simple Moving Averages (SMA). It seems to be in an overall sideways trend on the 4-hour short-term chart. 

The 50-day and 200-day SMAs are providing support at 1.0830 and 1.0831, while the 100-day SMA is acting as a resistance at 1.0873. 

EUR/USD Daily Chart

A decisive break above the 100-day SMA could see a rally to perhaps the March 21 high at 1.0942. 

Alternatively, a decisive break below the cluster of MAs in the 1,0830s might see a  pullback evolve down to support at the April 2 swing lows of 1.0725. 

A decisive break below would be characterized by a long red candle penetrating and closing near its low, or three red candles in a row, piercing through the level. 

The same would be the case for a decisive break above, except with green candles rather than red.

• EUR/USD trades softer near 1.0855 ahead of the US CPI data on Wednesday. 
• The pair keeps a positive outlook above the key EMA; RSI indicator holds in bullish territory. 
• The first resistance level will emerge at 1.0870; the initial support level is seen at 1.0833.

The EUR/USD pair clings to mild losses around 1.0855 on Wednesday during the early European session. The US March Consumer Price Index (CPI) report and the FOMC Minutes will be released later in the day. On Thursday, the European Central Bank (ECB) monetary policy decision will take center stage. The ECB is expected to keep rates unchanged at its April meeting, but the chance of easing policy in June increases. 

According to the four-hour chart, EUR/USD keeps the bullish stance unchanged as the major pair is above the key 100-period Exponential Moving Average (EMA). Additionally, the Relative Strength Index (RSI) holds in bullish territory around 56.50, which means the path of least resistance level is to the upside.

The first resistance level will emerge near the upper boundary of the Bollinger Band at 1.0870. The next hurdle is seen at the 1.0900–1.0905 zone, portraying the confluence of the psychological level and a high of March 18. A break above the latter will see a rally to a high of March 21 at 1.0942. 

The 100-period EMA at 1.0833 acts as an initial support level for EUR/USD. The additional downside filter to watch is the lower limit of the Bollinger Band at 1.0823. A breach of this level will expose a low of March 28 at 1.0775, followed by a low of April 1 at 1.0730. 

EUR/USD four-hour chart

• EUR/USD stable as markets await key economic events in the week.
• Focus on US CPI, expecting inflation moderation monthly, annually.
• ECB decision eyed, with rate adjustment speculation affecting Euro.

The Euro failed to gain traction against the US Dollar, registered minuscule losses of 0.02%, yet hovers at around the 1.0850 area, capped by dynamic support and resistance levels, namely daily moving averages (DMAs).

EUR/USD hovers around 1.0850, with markets eyeing upcoming economic releases

The economic docket was scarce on both sides of the Atlantic as market participants prepared for Wednesday's release of US inflation data and Thursday's European Central Bank (ECB) monetary policy decision.

The US Consumer Price Index (CPI) for March is anticipated to increase by 0.3% month-over-month, which is below the 0.4% increase in February, while annually, the CPI is expected to escalate from 3.2% to 3.4%. The core CPI, which excludes volatile food and energy prices, is forecasted to decrease from 0.4% to 0.3% month-over-month and from 3.8% to 3.7% year-over-year.

The ECB is expected to keep rates unchanged on April 11, but odds are increasing that President Lagarde and Co. will likely need to ease policy in June if they want to achieve a soft landing.

That would widen the interest rate differentials between the Eurozone (EU) and the US, favoring further EUR/USD downside.

EUR/USD Price Analysis: Technical outlook

With price action capped on the upside by the 100-DNA at 1.0872, buyers remain unable to challenge the 1.0900 figure, which could pave the way to challenge higher levels, like the March 21 high at 1.0942, followed by March’s 8 swings high at 1.0984. On the other hand, if sellers clear the confluence of the 50 and 200-DMAs at around 1.0830s, the EUR/USD could challenge the 1.0800 mark. Further downside is seen at the 1.0750 psychological level, ahead of the April 2 low of 1.0724.

• EUR/USD is captive to a range as traders await the next market mover, the US CPI data on Wednesday. 
• US inflation expectations are high while US Treasury yields have made a new high for the year. 
• The pair is trading within a narrow range between the 50, 100 and 200-day Simple Moving Averages.   

EUR/USD trades penned in, seesawing between tepid gains and losses in the 1.0850s on Tuesday. The lack of volatility could be due to many traders opting to stay on the sidelines ahead of the first big market mover for the week, the US Consumer Price Index (CPI) inflation data for March, scheduled for Wednesday.

EUR/USD traders withdraw to patiently await inflation data 

EUR/USD will likely not see much volatility until the release of CPI. Economists expect the data to show that prices in the US to have risen by 3.4% Year-on-Year in March (3.7% YoY for core goods), both of which are still well above the Federal Reserve’s (Fed) 2.0% target. A more substantial decline is required before the Fed will likely bring down interest rates from their current 5.5% level.  

For EUR/USD, the maintenance of higher interest rates in the US compared to the Eurozone is a bearish headwind. This is because relatively higher interest rates favor foreign capital inflows. 

In contrast to the Fed, the European Central Bank (ECB) is seen as more likely to cut interest rates earlier amid more subdued growth and inflation expectations. 

US Treasury Yields reach Year-to-Date Peak

US Treasury yields, a key gauge of US inflation expectations, peaked on Monday, with the 10-year Treasury Note yield reaching YTD highs of 4.46%. US yields are highly correlated to the US Dollar and, therefore, negatively correlated with the EUR/USD pair.  Since peaking on Monday, they rolled over and have been trending slightly down. 

US inflation expectations increased after the stellar Nonfarm Payrolls (NFP) jobs report released on Friday, which showed another 303K workers joining the economy in March. 

More people working usually means more people earning and spending money. This ought to be negative for EUR/USD, however, the pair has been broadly rising over the past five days. 

The release of better-than-expected German Industrial Production data on Monday may have helped the Euro at the start of the new week. 

German yields are rising faster than US yields according to Gregor Horvat of advisory firm Wavetraders, which may explain why EUR/USD keeps going higher despite the strong US data. 

Horvat uses Elliott Wave analysis, a type of cycle theory, and expects EUR/USD to continue its rally up to 1.0920 before the ECB meeting on Thursday.

Technical Analysis: EUR/USD increasingly looking range-bound

EUR/USD looks increasingly range-bound in the short-term. 

The pair failed to confirm the bearish Gravestone Doji candlestick posted on Thursday as price recovered on the following day and posted a bullish Dragonfly Doji candlestick – the one canceling out the other (shaded rectangle on chart). 

EUR/USD Daily Chart

EUR/USD now appears trapped within the pincers of three significant Moving Averages. The 50-day and 200-day SMAs are providing cushioning support at 1.0830 and 1.0831 and the 100-day SMA is showing resistance at 1.0873. 

A decisive break above the 100-day SMA would support the bullish case, and see a rally to perhaps the March 21 high at 1.0942. 

Alternatively, a decisive break below the cluster of MAs in the 1,0830s might see a  pullback evolve down to support at the April 2 swing lows of 1.0725.

• EUR/USD could retest the previous week’s high of 1.0876.
• The resistance zone appears around the 61.8% Fibo level of 1.0883 and the psychological level of 1.0900.
• The major level of 1.0850 could act as a key support, followed by the nine-day EMA at 1.0833.

EUR/USD put efforts to continue its winning streak for the sixth successive session on Tuesday. The pair hovers around 1.0860 during the Asian session. In the daily-frame chart, the pair shows that it is taking support on the nine-day Exponential Moving Average (EMA), which suggests that the pair could move upward to retest the strong resistance at the previous week’s high at 1.0876.

Furthermore, the EUR/USD pair could explore the 61.8% Fibonacci retracement level of 1.0883, followed by the psychological level of 1.0900.

Additionally, technical analysis suggests a bullish sentiment for the EUR/USD pair. The 14-day Relative Strength Index (RSI) is positioned above the 50 mark, indicating strength in buying momentum.

The lagging indicator, Moving Average Convergence Divergence (MACD), shows a divergence above the signal line, which indicates gaining strength for the pair. However, it is still positioned below the centreline. So, the traders are likely to await MACD to offer a clear trend direction.

On the downside, the EUR/USD pair could find immediate support at the major level of 1.0850, followed by the nine-day EMA at 1.0833. A break below this level could lead the pair to navigate the region around the psychological level of 1.0800 following the previous week’s low at 1.0724.

EUR/USD: Daily Chart

• EUR/USD trades in positive territory near 1.0860 on the weaker USD on Tuesday. 
• The US March CPI data on Wednesday could provide some hints about inflation trajectory and rate cut expectations. 
• The ECB is anticipated to keep its Main Refinancing Operations Rate unchanged at 4.5% at its April meeting on Thursday. 

The EUR/USD pair posts modest gains around 1.0860 during the early Asian session on Tuesday. The decline of the US Dollar (USD) provides some support to the major pair. The US NFIB Business Optimism Index and the RCM/TIPP Economic Optimism Index are due on Tuesday, along with the speech by Minneapolis Fed N. Kashkari.

The upbeat US labour market data and the strength of the US economy raised uncertainties about rate cuts from the Federal Reserve (Fed) this year. Minneapolis Fed President Neel Kashkari said last week that he penciled in two interest rate cuts this year but if inflation continues to stall, no rate cuts would be a possible scenario. Financial markets have priced in the 50% odds of rate cuts under 50% for both June and July, lower than at the beginning of April, according to the CME’s FedWatch tool.

The attention this week will shift to the US March Consumer Price Index (CPI) data on Wednesday after February’s annual inflation rate of 3.2% came in higher than expected. The stronger-than-expected figure in March data could dampen expectations for rate cuts in June, while softer inflation figures could fuel speculation for rate reductions.

 Across the pond, the European Central Bank’s (ECB) interest rate decision will be in the spotlight on Thursday. The ECB is widely expected to keep interest rates unchanged at its April policy meeting. Data released last week indicated that inflation fell unexpectedly in March, raising the expectation for ECB rate cuts. Investors will also be looking for any clues about the pace of the easing cycle once it begins. Markets believe there is a greater than 90% chance of an ECB cut in June, according to derivatives prices collected by LSEG.