- Until the release of US inflation figures, the most important event for Forex currency markets this week, the EUR/USD price continues to rebound upwards with gains extending to the resistance level of 1.0947, the highest for the currency pair in four months.
- The closest point to move towards the historical psychological resistance of 1.10, which confirms the bullish reversal for the most famous currency pair in the currency market.
- According to licensed trading companies' platforms, since the beginning of this month's trading, the currency pair has jumped by 5 percent.
Reasons for the Euro's Recent Gains
According to forex market experts, it was clear that the euro's stronger performance against other major currencies was supported by pledges to increase deficit spending among the major economies in the eurozone, which is expected to lead to stronger growth prospects for the bloc. In this regard, the main political parties in Germany led the spending pledges, and in coalition talks, they rushed to establish a €500 billion infrastructure fund aimed at stimulating infrastructure and defence. These steps were consistent with the actions of the governments of France and Italy, which urged joint European Union funding for economic and military support. Further supporting the euro, the European Central Bank indicated that monetary conditions in the bloc were becoming less restrictive after last week's widely expected interest rate cut, suggesting that the monetary easing cycle may be nearing its end.
Conversely, significant concerns about growth in the United States pressured the US dollar and fuelled a rise in the EUR/USD pair.
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European stock markets witnessed heavy losses
During yesterday's trading session, across stock trading platforms, European stock market indices continued their decline to their lowest levels in more than a month, following global stock markets, as the escalating trade war between the United States and its major economic partners exacerbated the sell-off of riskier assets.
According to trading, the Stoxx 50 index closed down 1.7% at 5,288 points, while the Stoxx 600 index fell 1.8% to 536 points. For his part, US President Trump doubled tariffs on Canadian aluminium and steel to 50% and threatened to take additional action if Canada did not reverse its retaliatory measures, heightening market fears of economic policy uncertainty.
On the corporate stock market, shares of BNP Paribas, UniCredit, BASF, and Air Liquide fell 3%. The threat of a more severe trade war also weighed on the auto sector, which had gained in morning trading due to its exposure to North American manufacturing plants. Stellantis shares fell 5%, Mercedes-Benz shares fell 2.5%, and Volkswagen shares fell 3% after reporting a sharp drop in profits, highlighting the uncertainty surrounding its future due to US tariffs.
Trading Tips:
Be careful. The recent gains in the EUR/USD require additional strength to continue. I still prefer to sell the EUR/USD from every upside level, but without risk. Also, we monitor the factors influencing the currency pair.
EUR/USD Technical Analysis Today:
According to trading on the daily chart, the general trend for the EUR/USD pair is strengthening, and the psychological resistance at 1.1000 will remain the most important to confirm bulls' control over the trend. From now on, and to reach it, technical indicators have moved towards strong overbought levels, led by the Relative Strength Index (RSI) and the MACD. Conversely, over the same timeframe, bulls will relinquish control if the EUR/USD returns to the 1.0640 support area. Obviously, the EUR/USD will be greatly affected by the announcement of US inflation figures, which in turn will influence expectations for the future policies of the US Federal Reserve in the coming months.
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