- German economic support, coinciding with the decline of the US dollar following the official approval of US tariffs, contributed to the recovery of the EUR/USD pair.
- As it jumped to the resistance level of 1.0797, the highest level for the currency pair in four months.
- Also, its gains are stable around it at the time of writing the analysis, awaiting the most important event this week, the announcement of US jobs figures, which in turn directly affects market expectations for the future policies of the US Federal Reserve.
Why Did the Euro Price Rise in Recent Trading?
According to Forex market trading and through currency trading companies' platforms. The euro's gains increased against the rest of the other major currencies, amid expectations that increased defence spending and borrowing in Europe will help revive the struggling eurozone economy. In Germany, the conservative coalition winning the elections CDU/CSU and the Social Democratic Party agreed to ease the country's strict borrowing rules with the aim of facilitating defence spending to exceed 1% of GDP.
In addition, the parties plan to create an off-budget fund of 500 billion euros to finance infrastructure projects over the next decade. European Commission President Ursula von der Leyen recently announced that the EU's new plans to boost Europe's defence industry could mobilize nearly 800 billion euros. She also proposed giving member states greater financial flexibility for defence investments, along with 150 billion euros in loans to support these efforts.
On the monetary policy front, the European Central Bank is widely expected to cut borrowing costs for the fifth time this week.
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The Euro-Dollar has finally changed its trend to an upside. Take this into account from now on, and if it moves to stronger gains, technical indicators will move towards strong overbought levels.
Currency Experts' Forecasts for the Euro's Future
In this regard, according to currency trading experts' forecasts, Morgan Stanley maintains a buy trade for the EUR/USD pair, targeting a move to the 1.08 resistance. Developments come amidst an accelerating downward trend in the US dollar, linked to concerns about the deteriorating US economy under the influence of President Trump's volatile decisions and punitive tariffs. The main surprise this week so far has been the US dollar's decline after confirming that tariffs on Canada and Mexico will continue, shattering a long-held view that tariffs are unequivocally beneficial to the dollar.
Investment banks are generally revising their forecasts for the euro against the US dollar, saying they no longer see it falling to parity in 2025. Notable names include Goldman Sachs, MUFG and TD Securities. Goldman Sachs expects the euro to reach $1.01 in six months, weaker than current levels but stronger than its previous forecast of $0.97.
MUFG Bank says, “We no longer offer a forecast for the EUR/USD pair below parity given our view that the slowdown in the US economy will be more pronounced by the end of the second quarter and the Federal Reserve will likely have cut the US federal funds rate again by then.”
EUR/USD Technical Analysis Today:
There is no doubt that the recent move of the EUR/USD pair. According to the performance on the daily chart, changes the general trend to an upward one and breaking the resistance of 1.0800. As we mentioned before, is a strong confirmation of the bulls’ control. Above that, technical indicators may start moving towards strong overbought levels led by the RSI and MACD. In contrast, and over the same period of time, the EUR/USD pair will exit its current ascending channel if it returns to the vicinity of the support levels of 1.0635 and 1.0550, respectively.
Decisively, we expect the EUR/USD to hold onto its current gains until the reaction to the US jobs numbers at the end of the week with another cautious look ahead to Trump's tariffs on Europe which would be negative for the EUR.
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