The EUR/USD pair remained steady near 1.1196 on Friday, closing the week with little movement.
Key drivers influencing EUR/USD
Earlier in the week, the US dollar strengthened as the US-China trade dispute showed signs of easing. However, this optimism was short-lived due to disappointing economic data.
The greenback initially rose by around 1% after Washington and Beijing agreed to reduce tariffs temporarily for 90 days, fuelling hopes of progress toward a broader trade deal. Yet, weak US economic indicators soon dampened sentiment:
- The April producer price index (PPI) fell to 2.4% year-on-year, down from 3.4% and below the forecast of 2.5%
- Month-on-month PPI dropped 0.5%, against expectations of no change
- US retail sales growth slowed sharply to 0.1% in March, following February’s 1.7% surge
- Industrial production stagnated in March after a 0.3% decline in February
These concerning figures have led traders to price in additional Fed rate cuts for 2025.
Technical analysis: EUR/USD
H4 Chart:
The EUR/USD continues to consolidate around 1.1173. A temporary rise to 1.1276 (testing resistance from below) remains possible, but this uptick is considered a corrective phase within the broader downtrend. Once complete, the pair may resume its decline toward 1.0950, this being the first key support level. The MACD indicator confirms this outlook, with its signal line below zero and pointing downward.
H1 Chart:
The pair has already met a local bullish target at 1.12653, followed by a pullback to 1.1170. Today, another test of 1.1276 is plausible, but the broader expectation remains bearish, with a potential drop towards 1.1100. This scenario is reinforced by the Stochastic oscillator, whose signal line is above 80, suggesting an imminent downward reversal towards 20.
Conclusion
The EUR/USD remains range-bound amid mixed fundamentals and technical signals. While a short-term rebound is possible, the dominant downtrend is expected to prevail, with key support levels at 1.0950 (H4) and 1.1100 (H1). Traders should monitor Fed policy expectations and upcoming economic data for further direction.
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