- Since the start of this week's trading, the EUR/USD price has been stable around its four-month high, with gains extending to the 1.0929 resistance level, around which it is stable at the time of writing this analysis.
- As we mentioned before, the performance of the most popular currency pair in the Forex market will remain within the performance range until the reaction to the announcements of global central banks, led by the announcement of the US Federal Reserve, in addition to a package of important economic releases.
Euro Gains Await German Economic Stimulus
According to Forex market trading, the Euro price is stabilizing around its recent gains amidst traders' anticipation of further updates on German fiscal stimulus. A crucial vote on the spending plan is scheduled for this week, where the proposed reform, which includes exempting defence spending from debt limits and establishing a 500-billion-euro infrastructure investment plan, is expected to be passed in both the House and Senate in Germany. This comes after an agreement reached by the election-winning CDU/CSU conservative bloc with the SPD and the Green Party.
On another influential front, investors are closely monitoring developments in the ongoing trade war and the situation in Ukraine. Regarding monetary policy, traders have reduced their expectations for a European Central Bank interest rate cut this year, now expecting only two more cuts, likely in April and June. Furthermore, interest rates are not expected to fall below 2%.
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Keep in mind that the EUR/USD pair is in a critical position to either continue its gains or be exposed to profit-taking. Carefully monitor the influencing factors listed in the analysis.
Overall, the main theme driving the EUR/USD price action is the fading of the "American exceptionalism" narrative that was so dominant in 2024, and this is likely to continue. US economic growth has slowed amid political uncertainty from the White House, with tariff announcements on April 2 considered a major risk.
Financial markets therefore view the tariffs as clearly damaging to the US economic outlook, and the US dollar has suffered as Trump pursues them. Meanwhile, the euro has strengthened thanks to an unexpected shift in German policy toward increased spending to revive the country's infrastructure and defence sectors. According to licensed currency trading platforms, the euro strengthened on Friday after the Green Party confirmed its approval of new Chancellor Friedrich Merz's plans to borrow more for defence and infrastructure spending. However, analysts warn that a more serious assessment of the outlook could emerge, which could weigh on the euro.
EUR/USD Technical Analysis Today:
According to daily chart trading, the EUR/USD upward trend needs to move towards the psychological resistance of 1.1000 to confirm the upward reversal and thus move with technical buy orders to stronger upward levels, which may then move the technical indicators, the Relative Strength Index and the MACD indicator, towards strong overbought levels. Breaking the psychological peak of 1.10 will be followed by a move towards the peaks of 1.1065 and 1.1130, respectively. Recently, the EUR/USD pair broke its 200-day moving average, pushing the exchange rate into an upward trend that is likely to rise for several weeks.
Conversely, and over the same period, a break above the support level of 1.0770 poses a real threat to the current bullish outlook. Ultimately, the EUR/USD's performance will be strongly influenced by the US Federal Reserve's announcement and the package of important economic releases.
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