- The EUR/USD outlook turns neutral as ECB signals cautious rate path.
- US dollar remains under pressure as trade tariffs continue to worry.
- The pair recovered but technical resistance at 1.1340 keeps mild selling pressure.
The EUR/USD outlook remains neutral as the price is caught between ECB’s dovish signals and growing volatility in the US economic policy. The euro has slightly gained, benefiting from potential ECB cut in June meeting. The rate is expected to fall to 2%. However, the ECB member Fabio Panetta stated that further rate cuts will be assessed on need basis, acknowledging weakening of the economy.
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Panetta also pointed that the Eurozone growth is weak and trade relation with the US could impact the economic growth significantly. The uncertainty aligns with the weaker German retail sales data. Although the annual retail growth beat expectations, the economic worries still persist. The German inflation data met expectations at 0.1%, lending no room to the bulls.
Meanwhile, the US dollar remains subdued due to political instability. The reinstatement of Trump tariffs suspended earlier, has renewed the global trade tension. Moreover, ballooning fiscal deficit and Trump’s tax bill also continue to keep a pressure on the Greenback.
These factors coupled with a weaker US Q1 GDP and a slight uptick in the weekly unemployment data have further deteriorated the outlook. The US Core PCE, Fed’s preferred inflation gauge, came at 0.1% meeting expectations. The initial reaction of the market remained favorable for the EUR/USD.
EUR/USD Technical Outlook: Cautious Bullishness Above 1.13
The EUR/USD 4-hour chart shows a strong rebound from 1.1200 support, forming a bottom. Despite a slight retreat from yesterday’s top, the price remains around 1.1340, holding most of the gains.
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The immediate resistance emerges at 1.1365 ahead of 1.1400. A sustained break above 1.1400 may open the doors to 1.1450 and 1.1500. One the flip side, 1.1300 remains a strong support ahead of 1.1250. The RSI remains around 50, supporting a cautious bullish tone.
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