EUR/USD Climbs to $1.0655, Reacts to Eurozone Data and U.S. Rate Speculation

While the U.S. dollar remains robust and the European Central Bank (ECB) contemplates rate cuts, the EUR/USD found renewed support, strengthening around the $1.0665 mark. This resurgence is likely linked to anticipations for the forthcoming Eurozone Industrial Production and U.S. Retail Sales data.

Nonetheless, the EUR/USD pair’s upward momentum might be tempered by a strengthening U.S. dollar, fueled by increased buying amidst geopolitical tensions, which could apply downward pressure on the EUR/USD.

Conversely, with the ECB open to rate reductions amid slowing inflation, there’s a marked policy divergence from the Federal Reserve’s stance, which has started to contemplate holding rates steady due to strong inflation and economic indicators.

This divergence is exerting downward pressure on the euro against the dollar. Market probabilities reflect a reduced expectation for U.S. rate cuts in June, increasing to 63.5% this week from last week’s 46.8%, according to the CME FedWatch Tool.

This has helped the dollar gain ground, affecting the EUR/USD exchange rate. Moreover, geopolitical dynamics also play a role, with recent Iranian missile strikes on Israel causing brief market fluctuations.

Despite potential escalations, the global markets remained relatively stable, likely due to advanced notices by Iran, which helped mitigate fears of a broader conflict. This situation, while stabilizing, continues to hold the potential for causing fluctuations in the dollar, impacting the EUR/USD trajectory.

On the technical front, the EUR/USD displayed slight gains, rising 0.17% to close at 1.06555 on April 15. It is poised near a critical pivot point at 1.0630, with potential upward movement towards resistance levels at 1.0685, 1.0726, and 1.0787.

Downward movements could find support at 1.0600, with further fallbacks at 1.0571 and 1.0528. The oversold condition indicated by an RSI of 27 suggests possible bullish corrections if the pair remains above its pivot.

The 50-day EMA at 1.08 underscores the prevailing bearish trend, setting a broader context for the currency pair’s movements.