The EUR/USD forecast gains renewed momentum as the Euro rises to 1.1340. It recovered from its low last week as a result of increased central bank speculation and the US dollar’s decline. Traders are on high alert as the European Central Bank (ECB) signals additional easing and the Federal Reserve makes its monetary policy decision on May 6–7. Early European trading’s currency movements are also being impacted by the ongoing uncertainty surrounding the US-China trade.
Will Trade Tensions Shake the Dollar Again?
The Euro has surged from its recent 3-week low of 1.1225 as the US dollar continues to decline. The EUR/USD exchange rate surged during Monday’s European session. Powell’s press conference and the policy statement have a significant influence on the market’s direction. The Fed is expected by most to maintain interest rates between 4.25% and 4.50%.
Additionally, the US dollar’s value declined when President Donald Trump expressed optimism for new trade agreements. However, no direct communication with Chinese President Xi Jinping was reported. Investors are moving their money to safer assets like the euro as long as the US and China are at odds. The forex market is experiencing disruptions as a result of this investor activity.
Can ECB Easing Fuel the EUR/USD Forecast?
The EUR/USD forecast remains firm as markets expect the ECB to continue easing policy despite a rise in inflation. April’s core Harmonized Index of Consumer Prices (HICP) climbed to 2.7%, yet ECB Vice President Luis de Guindos maintained a dovish tone. In an interview, he pointed out that if inflation increases, the central bank could still reduce interest rates.
The Sentix Index showed a recovery in investor sentiment as well, rising from -19.5 in April to -8.1 in May. Since Trump’s foreign trade policies continue to impact the Eurozone economy as a whole, the ECB is anticipated to prioritize growth despite rising inflation. If the outlook worsens, additional interest rate reductions might be made at the June meeting.
EUR/USD Holds Above Key Support Zone
Technically, the EUR/USD pair is still rising above 1.1300 after spotting significant demand close to the 20-day Exponential Moving Average at 1.1260. The Relative Strength Index (RSI) is still tilting upward and has limited momentum, staying in the neutral range of 40 to 60. The resistance level of 1.1500 is being watched by traders, and the important support level for Euro bulls is 1.1214.
Going forward, short-term market movements will be greatly influenced by the Fed’s policy guidance. The Euro may keep rising if the central bank signals a protracted pause on interest rates. Alternatively, the EUR/USD Forecast’s upside may be constrained by a hawkish shift.
In general, traders are striking a balance between geopolitical uncertainties and central bank signals. Global risk sentiment, inflation trends, and the direction of monetary policy will all continue to influence the EUR/USD pair’s volatility in a sensitive forex market.
Will the EUR/USD Forecast Stay Bullish
The EUR/USD forecast indicates a slightly bullish outlook; it is boosted by dovish ECB expectations and a declining US dollar. The Euro may continue its upward trend shortly as traders keep an eye on Fed signals and trade developments. As usual, the secret to successfully navigating the upcoming moves will be paying close attention to the story of the Forex market as it develops.
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