During Monday’s European session, EUR/USD slid back toward 1.1350. The Euro fell against most major currencies in advance of key inflation and GDP data releases. Diminished price pressures have contributed to traders now betting that the European Central Bank (ECB) will cut rates again, in its June meeting, amid worldwide uncertainties.
Traders Focus on Eurozone Inflation, GDP Data
The Euro looks like it is on the defensive as investors wait for this week’s flash estimates for the Eurozone Harmonized Index of Consumer Prices (HICP). It is the first quarter of Gross Domestic Product (GDP). Headline inflation is expected to fall to the European Central Bank’s target of 2%. It is the slowest price growth since October 2024, and the economy is expected to grow by only 0.2% quarter on quarter.
If inflation were to moderate, it would likely strengthen the case for a cut in the ECB’s interest rates in June. Reuters reported that over the weekend, policymakers are becoming more confident in cutting rates, although they are ‘cautious’ about hiking aggressively. The report did not identify any specific officials.
Trade Tensions Add to Euro’s Struggles
The uncertainty in trade between the U.S. and Europe is also having a detrimental effect on the Euro. European Commissioner for Trade Valdis Dombrovskis, speaking in Washington at the IMF meetings, said a trade deal with the U.S. is not around the corner. He told reporters, “There’s a lot of work ahead to come to more concrete parameters and elements of cooperation to avoid tariffs.” Tensions are still around with uncertainty, questioning whether any face-to-face talks had taken place in D.C. with U.S. Treasury Secretary Scott Bessent.
Traders will be looking forward to seeing key economic data coming from the U.S. this week. A couple of these important reports include, on Friday, the Nonfarm Payrolls (NFP), which could offer a bit of a fresh directional bias for the U.S. Dollar.
Technical View: EUR/USD Holds Near 1.1350
Technically, the EUR/USD continues to consolidate around the 1.1350 mark. Overall, the trend is positive, and the 20-week EMA is still positive and rising around the 1.0885 mark. The 14-week RSI also remains above 70, which indicates that the momentum remains very bullish, but it does suggest that there will be a pullback in the near term. On the upside, the next major resistance is at 1.1500. On the downside, we have support near the July 2023 high of 1.1276, and that level is certainly a key level for Euro bulls to defend.
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