EUR/USD Holds $1.1306—Market Eyes ECB Cuts and Trump’s Trade Standoff

The EUR/USD is still falling against the US dollar, with the EUR/USD pair trading at $1.1331 in early Friday sessions. This is a steady decline from the April high of $1.1559 as markets digest mixed macro drivers and geopolitical risks.

Across the eurozone, traders are pricing in a rate cut from the European Central Bank (ECB) as early as June. Dovish comments from ECB policymakers, including Finnish Governor Olli Rehn who didn’t rule out a “larger interest rate cut”, have tilted sentiment. ECB Council member Madis Muller echoed this view, saying that worsening global trade conditions could justify looser monetary policy to boost growth.

Despite this weighing on the euro, the pair’s downside is somewhat cushioned by the dollar’s weakness, which is mainly due to US-China trade friction.

Trump’s Trade Talk Fuels Dollar Uncertainty

On the US front, President Donald Trump said Thursday that trade talks with China were active – comments quickly denied by Beijing. A spokesperson from China’s commerce ministry said no talks had taken place and asked the US to withdraw unilateral tariffs.

This keeps the dollar on edge, especially as we await the University of Michigan’s revised Consumer Sentiment and Inflation Expectations reports later today.

Matt Weller, head of market research at StoneX, summed it up: “There’s a chasm as wide as the Pacific between the US and China’s trade narratives – and until that closes, dollar rallies will be short-lived.”

With dovish expectations from the Fed and ongoing IMF meetings, the current risk environment is favorable for choppy, range-bound trading in major FX pairs like EUR/USD.

Technical Setup: Bounce or Breakdown

Technically, EUR/USD is consolidating at $1.1331, just above a key ascending trendline support at $1.1306. The 50-period EMA ($1.1387) is capping upside, while the MACD has flattened – indicating market indecision.

For newbies to this pair, it’s a textbook “bounce-or-break” scenario:

Trade Setup Highlights:

• Buy Entry: Bounce from $1.1306 with a confirmed bullish candle

• Sell Entry: Break below $1.1306 with volume

• Upside Targets: $1.1387 and $1.1442

• Downside: $1.1262 and $1.1214

• SL: Below $1.1262 for longs

Wait for price to do the work.