- Last week, the euro gained due to a wave of optimism regarding Trump’s tariff policy approach.
- Data on Friday revealed a rebound in Eurozone business activity.
- Economists predict a 25-bps rate cut during the European Central Bank meeting.
The EUR/USD outlook suggests caution ahead of monetary policy meetings in the US and the Eurozone. Nevertheless, the pair eased from last week’s peaks as markets anticipated a Fed pause and ECB rate cut.
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Last week, the euro gained against the dollar due to a wave of optimism regarding Trump’s tariff policy approach. The risk of further slowdown in the Eurozone economy fell after Trump failed to give more guidance on import tariffs. This indicated that he would likely take a more gradual approach than anticipated.
Furthermore, data on Friday revealed a rebound in the Eurozone economy that boosted the euro. Business activity in France and Germany improved significantly, easing pressure on the European Central Bank to cut rates. Nevertheless, policymakers made remarks supporting a rate cut this week and more to come during the year.
Economists predict a 25-bps rate cut during the European Central Bank meeting this week. At the same time, policymakers might maintain their dovish tone, leading to a decline in the euro. On the other hand, the Fed will likely keep rates unchanged. They might also emphasize caution due to uncertainty about Trump’s policies, supporting the dollar.
EUR/USD key events today
Neither the Eurozone nor the US will release major reports today. Consequently, the price might consolidate ahead of central bank meetings.
EUR/USD technical outlook: Bulls meet a strong hurdle at 1.0500
On the technical side, the EUR/USD price has made a new high in its bullish trend, near the 1.0500 key psychological level. After reaching this high, the price paused and started retreating. However, the bullish trend remains intact since it trades above the 30-SMA, with the RSI above 50.
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Recently, the EUR/USD trend reversed from bearish to bullish, with the price breaking above the 30-SMA. Bulls have kept the price above the SMA, respecting it as support. At the same time, the price has made higher highs and lows.
Therefore, there is a high chance this uptrend will continue. The price might retest the 30-SMA and its channel support before climbing to break above the 1.0500 resistance level. A higher high will confirm a continuation of the bullish trend.
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