The EUR/USD pair displayed a significant technical movement recently, as buyers managed to stall a decline at the crucial 100-hour moving average (MA). This development highlights the importance of this key level in the current trading environment. Earlier in the week, the EUR/USD had dropped to mid-week lows on Wednesday, testing support at the 200-hour MA and the 38.2% retracement level of February’s trading range.
This support held firm, leading to a bounce. On Thursday, the pair extended its recovery by moving back above the 100-hour MA, which had acted as resistance earlier in the week before the drop. The break above this average granted the buyers enough momentum to push prices further up.
However, the rally stalled just ahead of last week’s high, with the peak reaching close but failing to surpass it. During today’s European session, the price found support at the 100-hour MA, reinforcing its newfound significance. Initially, the 100-hour MA was resistance on Wednesday, then transitioned into support after Thursday’s strong move.
The price action today has confirmed this level once more as a strong support line. Given that the 100-hour MA is holding as support, the bias remains to the upside. A potential retest of today’s high and last week’s peak at 1.05137 remains on the cards.
However, should the 100-hour MA fail, selling pressure might resurface, targeting the next key level at the 200-hour MA which is currently at 1.0437 and rising. The EUR/USD pair continues to trade within a range, maintaining a bullish bias. The upcoming U.S. PMI data is expected to be a significant catalyst for the pair.
The U.S. Dollar has been making a comeback this week, reducing some of last week’s losses driven by benign U.S. Producer Price Index (PPI) data and recent tariff announcements from the Trump administration. There has been no notable catalyst to support the greenback this week, although some analysts have pointed to less dovish comments from Federal Reserve’s Waller, explaining the rise in Treasury yields. During the Asian session yesterday, positive headlines emerged regarding tariffs, with President Trump indicating the possibility of a new trade deal with China.
This announcement weakened the U.S. Dollar, causing further depreciation throughout the European and U.S. sessions. On the European side, data today indicated steady growth, with an uptick in the manufacturing index. However, the euro experienced some pressure from a poor reading in France’s economic data, increasing market expectations for European Central Bank (ECB) easing by 80 basis points by the end of the year.
These expectations were moderated by better data from Germany and the Eurozone PMIs. The baseline expectation remains for three more rate cuts. On the daily chart, the EUR/USD is trading between the 1.0532 and 1.0450 support levels.
Buyers are likely to step in around support levels to position for a rally towards the 1.06 handle. Conversely, sellers will be watching for a break below support to increase bearish bets, targeting the 1.0380 level. The 4-hour chart shows a key upward trendline defining the bullish momentum.
If there is a pullback into the trendline, buyers may look to lean on it with a defined risk below to rally towards 1.06. Sellers, on the other hand, will aim for a break lower to increase bearish positions and target new lows.
Eur/usd holds strong at support
On the 1-hour chart, an upward trendline defines the bullish momentum. Intraday, buyers are expected to rely on the trendline to position for a rally towards 1.06, while sellers will look for a break lower to extend the pullback to the 1.0445 level. As we conclude the week, the focus will be on the U.S. Flash PMIs, which are anticipated to provide further market direction.
Inflation updates from Europe and the United States are under the spotlight as US President Donald Trump’s executive orders continue to overshadow macroeconomic developments. The EUR/USD pair saw a decline throughout the first half of the week, before recovering slightly to close relatively unchanged at around 1.0480 by week’s end. This week’s risk-averse environment was fueled by President Trump’s tariff plans, benefiting the US Dollar.
Trump’s recent executive orders have created global uncertainty. Among these actions, he made moves to reduce health coverage, end federal benefits for immigrants, and cut government funding by trimming federal jobs. These decisions are crucial as they impact not only the economic landscape within the US but also the decisions of central banks worldwide, particularly the Federal Reserve (Fed).
The Federal Open Market Committee (FOMC) released the Minutes of its January meeting, showing policymakers unanimously decided to keep the benchmark interest rate unchanged at 4.25%-4.50%. They highlighted the high degree of uncertainty and pointed out the upside risks to inflation due to higher costs from Trump’s tariffs. The European Central Bank (ECB) has also expressed concerns over the potential impact of Trump’s tariffs on European growth.
A document released by the European Parliament noted that greater friction in global trade could dampen exports and weaken the global economy. The document elaborated that US tariffs on EU products could make them more expensive, reduce sales, and ultimately impact EU consumers if counter-tariffs are imposed. The macroeconomic calendar provided limited but relevant data.
The Hamburg Commercial Bank (HBOC) released preliminary estimates for the EU’s February Purchasing Managers’ Indexes, which indicated struggling economies. New orders continued to fall, confidence dipped to a three-month low, and companies lowered staffing levels. The Manufacturing PMI saw a slight improvement but still indicated contraction, while the Services PMI reached its lowest in three months.
In the US, S&P Global PMIs showed mixed results. Manufacturing activity expanded marginally, whereas the Services PMI contracted more than expected. Upcoming days promise more significant data, including inflation updates from both the EU and the US, the German GDP revision, and the second estimate of US GDP.
The technical outlook for EUR/USD shows limited bullish potential in the long term. On the weekly chart, the pair traded below a firmly bearish 20 Simple Moving Average (SMA) at around 1.0530, with the 100 and 200 SMAs indicating a downward trend. Technical indicators like the Momentum indicator maintained an upward slope, while the Relative Strength Index (RSI) headed south around 45.
Similarly, the daily chart indicated a marginally bullish 20 SMA providing support at around 1.0410, while a bearish 100 SMA capped advances around 1.0550. Technical indicators remain within positive levels but are turning lower, suggesting waning buyer interest. A break below the 1.0400 threshold could lead to a decline towards the 1.0320 region, with further support at 1.0276.
Resistance stands at 1.0527, followed by the 100-day SMA at 1.0550 and the December high at 1.0639. The EUR/USD pair remains under pressure amid global trade tensions and mixed economic signals. As markets await further inflation data and developments on Trump’s tariff plans, the pair’s future direction will depend heavily on upcoming macroeconomic indicators and geopolitical events.
