Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0350.
- Add a stop-loss at 1.0525.
- Timeline: 1-2 days.
Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0525.
- Add a stop-loss at 1.0350.
The EUR/USD pair retreated after hitting a crucial resistance at 1.0510 as traders focused on the upcoming Federal Reserve minutes. It dropped to a low of 1.0445 as the recent rebound faded.
FOMC minutes and ECB meeting ahead
The pair retreated as investors embraced a risk-off sentiment amid concerns about tariffs now that the 30-day deadline for Canada and Mexico is approaching. This risk-off sentiment helped to push the US dollar index higher by 0.30% to $107. It also pushed US equities much lower, with the Dow Jones and Nasdaq 100 indices falling by 160 and 72 points, respectively.
Analysts expect that Donald Trump will move ahead with his tariff threat on Canadian and Mexican goods next month. He has also pledged to implement more tariffs on European goods, a move that will lead to more volatility.
The next key EUR/USD news will be the upcoming European Central Bank (ECB) non-monetary policy meeting. While the committee is not expected to do anything, there is a likelihood that a statement by one or more officials will have an impact on the euro.
The US will publish several important economic data, including housing starts and building permits. These numbers will provide more color about the state of the housing market now that mortgage rates have remained high.
The Federal Reserve will publish minutes of the last meeting when it left interest rates unchanged at 4.5%. Officials maintained a hawkish tone, emphasizing that it will only cut interest rates when inflation shows progress.
With inflation rising, analysts expect that the Federal Reserve will not cut interest rates soon. Instead, most of them expect it to hold them steady for a while until prices starts falling.
EUR/USD technical analysis
The EUR/USD pair has remained in a tight range in the past few weeks. It rose to the key resistance level at 1.0505, which coincided with its highest point in January. It has found a strong resistance and is hovering at the 50-day moving average.
The Relative Strength Index (RSI) and the MACD indicators have continued pointing upwards. Therefore, the pair may resume the downward trend as bears target the lower side of the channel at 1.0215.
However, a move above the key resistance level at 1.0506 will confirm the bullish moves and point to more gains, potentially to 1.0600.
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