EUR/USD HOVERS AROUND 1.1300 AFTER EUROPEAN SESSION RETREAT
EUR/USD eased back from intraday highs near 1.1325 and found itself consolidating around the 1.1300 mark as the European trading day wound down. The pair’s modest pullback came despite the broader up-trend remaining intact since its bounce off 1.1265 earlier this week. Price action suggests traders are pausing to digest a batch of mixed macro releases on both sides of the Atlantic before committing to fresh directional bets.
ECB’S DOWNWARD INFLATION WARNING LOOMS LARGE
Across the Eurozone, policymakers have warned of renewed downside risks to headline inflation. Markets are now pricing in roughly a 25-basis-point rate reduction by the ECB as soon as July, a shift that could sap the euro’s appeal if April’s flash CPI estimate undershoots expectations. Yesterday’s preliminary GDP print for the U.S. showed a 0.3% contraction, underscoring the fragility of the global growth backdrop and prompting investors to re-evaluate the relative resilience of the single currency.
US LABOR DATA SET TO INFLUENCE DOLLAR DIRECTION
Attention has firmly turned to Friday’s U.S. Nonfarm Payrolls report, with consensus forecasts calling for a slowdown to 130,000 new jobs in April from March’s 228,000. Initial Jobless Claims rose to 241,000 last week—well above the 224,000 estimate—reinforcing expectations that the Federal Reserve may pivot toward rate cuts later in the year. A surprise in either direction could trigger a sharp repricing of U.S. rate-cut probabilities and send EUR/USD sharply higher or lower.
TECHNICAL LANDSCAPE BACKS BULLISH TREND BUT REVEALS SHORT-TERM FRICTION
Trend-based indicators remain firmly supportive of upside. The 20-, 50-, 100- and 200-day simple moving averages all lie comfortably below spot, currently offering dynamic support in the 1.1275–1.1258 zone. Yet momentum tools paint a more nuanced picture. The MACD on the daily chart has edged into negative territory, and the RSI sits near 55—neutral ground that could swing either way. On the four-hour timeframe, price trades below the 20 and 100 SMAs, with the 50-period EMA at 1.1339 now marking immediate resistance.
KEY LEVELS TO WATCH FOR TRADERS
The first barrier to renewed euro strength lies at 1.1334, closely followed by the April 22 trendline confluence near 1.1348. A sustained break above these pivots would open the door to 1.1385 and the multi-week high at 1.1425. On the downside, the critical support band between 1.1275 and 1.1224 must hold to keep the medium-term uptrend intact; a daily close below 1.1224 risks a deeper retreat toward the April 10 swing low at 1.1190.
RISK SENTIMENT AND TRADE-WAR DYNAMICS INFLUENCING FLOW
Chinese state media reports this week that the U.S. has reached out to begin tariff talks with Beijing have bolstered risk appetite and weighed slightly on the safe-haven dollar. Meanwhile, renewed expectations for four Fed rate cuts by year-end contrast with ECB easing bets, creating a cross-currents environment where EUR/USD can amplify shifts in sentiment. Traders should remain vigilant for sudden spikes in volatility around major data releases.
STRATEGIC OPINION: CAUTIOUS BULLISH OVERLAY WITH DOWNSIDE PROTECTION
EUR/USD’s undeniable positioning above its core moving averages supports a constructive bias. Yet mixed momentum readings and heavy reliance on pending inflation and jobs data counsel prudence. A tactical approach might involve adding to long exposure on decisive closes above 1.1348, targeting 1.1389 and 1.1425, while placing protective stops just beneath 1.1265 to mitigate the risk of an aggressive pullback. On balance, a Hold rating with a slight Bullish tilt captures the current landscape: favouring upside continuation but ready to defend on any violation of key supports.
