- The EUR/USD forecast turned bearish after falling below 1.1300 level.
- The US court decision supported the US dollar.
- All eyes are now on the US Q1 GDP for further impetus.
The EUR/USD forecast turned bearish after falling below the key 1.1300 level, marking fresh weekly lows. at 1.1210. The downtick move stemmed from a rise in the US dollar after a US federal trade court paused the imposition of broader tariffs on imports, stating it misuse of authority under IEEPA. The decision has reduced the fears of trade war.
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The US Dollar Index (DXY) surged above 100.40 due to improved risk sentiment and expected sharp rise in US bond yields. The recent court decision may provide a boost to US growth outlook and weigh on the Euro’s bullish trend.
According to ING analyst, Chris Turner, the EUR/USD is reasonably lower on US tariff news as the US growth outlook has slightly improved along with risk premium attached with the dollar. He also stated that the recent downturn move could lead to 1.1050, maintaining a broad range of 1.10 to 1.15.
Meanwhile, Trump’s delay on imposing tariffs on EU until July 09, offered some respite to the markets. However, uncertainty still persists. The ECB officials will announce policy decision next week. The consensus remains for another rate cut, some officials have turned hawkish, resisting further easing.
The recent Eurozone data added more traction to the sellers with France’s inflation slowing unexpectedly. On the other hand, the ECB policymaker and head of Slovak Central Bank, Peter kazimir was found guilty of corruption. This development has clouded the image of ECB and raised a political noise across the Europe.
On the other hand, the recent uptick move in the dollar could be temporary as the President Trump can seek alternatives to restore the tariffs which can eventually weigh on the dollar.
Today’s major economic data is US Q1 GDP which can provide further impetus to the market. The US dollar has erased some gains in anticipation of the data.
EUR/USD Technical Forecast: Recovery After a Pullback
The EUR/USD 4-hour chart shows the price remains well supported by the rising trendline. Today’s bearish move met solid support and recovered around 60 pips so far. However, the price is below 20-period SMA. Meanwhile, the RSI shows a sharp reversal from the oversold zone.
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Any upside will meet strong resistance around 1.1300 ahead of 1.1340 and then 1.1400. On the flip side, the pair may test today’s lows at 1.1210 ahead of 1.1150 and then 1.1050.
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