EURUSD is at risk when the ECB lowers interest rates
Updated
BULLISH US DOLLAR FORECAST 
EURUSD
- The mighty dollar is back as CPI data impacts policy paths
- EURUSD at risk after the ECB laid out the conditions for lowering rates
THE MIGHTY DOLLAR IS BACK AS CPI DATA IMPACTS POLICY PATHS
The US dollar is back in the FX market following strong CPI data, leading to a reevaluation of the world's reserve currency. The data was released on Wednesday, with prices trading above key levels and indicating a potential for the dollar to quickly close the gap, which it did.
The dollar index has surged, breaking through resistance levels as markets predict fewer interest rate cuts this year. This suggests only one cut is expected before the end of the year. The dollar is expected to remain strong due to the anticipated escalation in the Middle East following US President Joe Biden's announcement of an imminent attack by Iran in response to Israel's strike on an Iranian embassy in Damascus.
EURUSD AT RISK AFTER THE ECB LAID OUT THE CONDITIONS FOR LOWERING RATES
The ECB statement confirmed that the governing council will not pre-commit to any rate path but will respond to incoming data. Prominent ECB officials have expressed a preference for a June cut. The statement brought joy to the doves as it acknowledged the potential for interest rates to be lowered if inflation dynamics align with target goals.
EURUSD broke through key technical levels including the 50 and 200-day SMAs, the 38.2% Fib retracement, and the psychological level of 1.0700. The close below the 23.6% Fib retracement suggests a possible move towards the 2023 low. However, the pair is nearing oversold territory (RSI), which may pose a challenge to further downward movement.
The EURUSD is expected to weaken in the medium term, but in the meantime, it may slightly ease back due to oversold conditions and lack of impactful US economic data next week. A positive ZEW figure could help the euro recover some recent losses as sentiment and confidence indices improve.
EURUSD - The mighty dollar is back as CPI data impacts policy paths
- EURUSD at risk after the ECB laid out the conditions for lowering rates
THE MIGHTY DOLLAR IS BACK AS CPI DATA IMPACTS POLICY PATHS
The US dollar is back in the FX market following strong CPI data, leading to a reevaluation of the world's reserve currency. The data was released on Wednesday, with prices trading above key levels and indicating a potential for the dollar to quickly close the gap, which it did.
The dollar index has surged, breaking through resistance levels as markets predict fewer interest rate cuts this year. This suggests only one cut is expected before the end of the year. The dollar is expected to remain strong due to the anticipated escalation in the Middle East following US President Joe Biden's announcement of an imminent attack by Iran in response to Israel's strike on an Iranian embassy in Damascus.
EURUSD AT RISK AFTER THE ECB LAID OUT THE CONDITIONS FOR LOWERING RATESThe ECB statement confirmed that the governing council will not pre-commit to any rate path but will respond to incoming data. Prominent ECB officials have expressed a preference for a June cut. The statement brought joy to the doves as it acknowledged the potential for interest rates to be lowered if inflation dynamics align with target goals.
EURUSD broke through key technical levels including the 50 and 200-day SMAs, the 38.2% Fib retracement, and the psychological level of 1.0700. The close below the 23.6% Fib retracement suggests a possible move towards the 2023 low. However, the pair is nearing oversold territory (RSI), which may pose a challenge to further downward movement.
The EURUSD is expected to weaken in the medium term, but in the meantime, it may slightly ease back due to oversold conditions and lack of impactful US economic data next week. A positive ZEW figure could help the euro recover some recent losses as sentiment and confidence indices improve.
Note
Note
The driving force for recovery was the selling pressure on the USD when the DXY index dropped to 105.78. However, the upside prospects for EURUSD may be quite limited as the market is expecting that the ECB will cut interest rates in June, putting pressure on the Euro.Note
How will EUR/USD fluctuate after breaking the important resistance zone 1.07?On the daily chart, EURUSD has broken through the key resistance level at 1.07 and is currently testing a failure at the intersection of the 50% Fibonacci retracement and the 21 moving average. This is an area where sellers are intervening to Prepare to push prices down.
Note
EUR/USD extended its bullish streak into the fourth trading session, but is still trading within Friday's range so can be considered sideways for the time being. The short-term outlook for this pair remains positive as it is trading above the 20 EMA at 1.0730.Note
EURUSD broke through and is still holding above the important 200 EMA resistance mark at 1.0800 after the US April PPI data was released.The pair is still reacting to the upper boundary of the symmetrical triangle pattern formed on the daily chart. This border is drawn from the high on December 28 around 1.1140, whereas the lower border comes from the low on October 3 at 1.0448.
Note
On the daily time frame, EURUSD reversed below the 1.0880 resistance, coinciding with the upper border of the descending channel. If the price maintains its bearish momentum with a bearish break of the 1.0780 support, the price could fall further towards the 1.0650 support. Conversely, if the price breaks out of the descending channel and the 1.0880 resistance to the upside (bullish breakout), it could push the next potential resistance level at 1.1000 further. The RSI indicator is fluctuating near the overbought zone, suggesting that the potential for further price increases is limited.
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