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• A 25 basis point cut to the ECB deposit facility rate is widely anticipated, marking the seventh cut in the current cycle.
• The ECB continues to cut rates amid slow Eurozone growth, while the Federal Reserve pauses, creating a notable divergence in monetary policy.
• What next for EUR/USD?

A 25 basis point cut to the ECB deposit facility rate is fully expected today. However, the chances of another cut in April are less certain, with markets now pricing in a 50/50 probability of a cut.. The market is now focusing on a possible pattern of quarterly rate cuts after this week. Investors are also considering whether the ECB might eventually lower rates below 2%, as forward rates for the end of the year are currently priced at 70 bps which would leave rates at 2.5%.

While U.S. tariffs could still impact the economic outlook, the chances of the ECB cutting rates faster or more deeply have lessened. This shift comes after recent inflation data showed a smaller-than-expected decline, reducing pressure on the ECB to act aggressively.

Source: LSEG

What to Expect from the ECB’s Decision

Today’s decision is expected to mark the ECB’s seventh rate cut during its current cycle of reducing rates. Over the past year, the central bank has lowered rates by 150 basis points, with another 25-basis-point cut likely today. This would bring the rate close to the estimated neutral range of 1.5% to 2.5%, marking an important point in the ECB’s policy decisions.

The reason for this expected cut is the slow economic growth across the eurozone and lower inflation pressures. January’s inflation data for the euro area showed that core inflation is cooling down. To boost demand, the ECB is under pressure to ease financial conditions even more.

The Debate Over “Restrictive” Policy

A major topic in today’s meeting is whether ECB President Christine Lagarde will keep calling the current policy “restrictive.” Some hawkish members of the Governing Council believe the policy is no longer restrictive, given the recent rate cuts and other easing steps. However, more dovish policymakers point to Europe’s ongoing economic challenges and uncertainty with growth and inflation as reasons to continue monetary support.

Markets will pay close attention to Lagarde’s comments in the press conference. If she signals a move away from describing the policy as “restrictive,” it could lead to changes in market expectations and affect the value of the euro.

Diverging Policies: ECB vs. Federal Reserve

The ECB and the Federal Reserve are taking very different approaches to monetary policy. The Fed is being cautious and has paused its rate hikes as the U.S. economy shows signs of slowing. Meanwhile, the ECB is continuing to cut rates.

This difference has caused the euro-dollar rate spread to narrow, giving the euro an advantage in recent trading. If the ECB stays focused on easing policies without hinting at big changes, the euro could remain strong against the dollar in the short term.

Final Thoughts

The recent strength and rise in EUR/USD hasn’t been driven much by ECB actions. Instead, it’s been more influenced by weak U.S. economic data and hopes for a ceasefire between Ukraine and Russia.

Looking ahead, U.S. tariffs on the EU will play a major role in moving the EUR/USD rate. Over the medium term I do expect EUR/USD to weaken. This view also depends on the ECB cutting rates by at least another 50 basis points to reach 2.0%.

Technical Analysis – EUR/USD

From a technical standpoint, EUR/USD is currently enjoying one of its strongest weekly gains in recent memory. The question is will it be able to hold onto these gains through the ECB meeting and the US jobs data on Friday?

The question is how far can the Euro rally at this stage?

Weak US data and recessionary fears are really weighing on the US Dollar of late. Despite the recent concerns around inflation expectations and tariff announcements, the US Dollars selloff has been swift.

There is scope for further upside but the RSI on a daily timeframe has already entered overbought territory, providing one warning sign. Given that we have NFP jobs data tomorrow it may not be wise to try and chase further gains to the upside.

Immediate resistance rests at 1.0840 before the 1.0904 and 1.0948 comes into focus.

A move lower may find support 1.0755 before the 1.0700 and 1.0600 handles become the areas of focus.

EUR/USD Daily Chart, March 6, 2025

Source: TradingView (click to enlarge)

Support

• 1.0755

• 1.0700

• 1.0600

Resistance

• 1.0840

• 1.0904

• 1.0948

In this article we’re going to take a quick look at the Elliott Wave charts of Bitcoin BTCUSD published in members area of the website. As our members know BTCUSD is showing impulsive bullish sequences in the cycles from the 15,760 and 50,186 lows , that are calling for a further strength. Recently we got a pull back that has ended at the Blue Box zone,our buying area. In the further text we are going to explain the Elliott Wave Forecast and trading setup.

BTCUSD Elliott Wave 4 Hour Chart 02.25.2025

BTCUSD is showing an incomplete structure from the all-time high on January 20th. The current Elliott Wave count suggests we should ideally see more downside in the short term, toward the 84,703–73,638 area -Blue Box (our buying zone). As the main trend is bullish, we expect to see at least a 3 waves bounce from the buying zone. Once the price reaches 50 Fibs against the (X) blue peak, we will book partial profits. This setup could ideally lead to a rally toward new highs. We advise against selling and prefer the long side from the marked blue box (buying zone).

Official trading strategy on How to trade 3, 7, or 11 swing and equal leg is explained in details in Educational Video, available for members viewing inside the membership area.

Quick reminder on how to trade our charts :

Red bearish stamp+ blue box = Selling Setup
Green bullish stamp+ blue box = Buying Setup
Charts with Black stamps are not tradable. 🚫

BTCUSD Elliott Wave 4 Hour Chart 03.05.2025

BTCUSD made an extension toward our buying zone: 84,703–73,638. The crypto found buyers at the Blue Box as expected, and we got a good reaction from there. As a result, traders who entered long positions are now enjoying risk-free profits. With the price holding above the 78,197 low, we expect further strength to follow. Next technical area to the upside comes at 98,258-102,052.

USDJPY continues to trend lower within larger bear channel and fell to five-month low on Thursday as dollar remains under increased pressure from trade war uncertainty and Fed’s dovish shift.

Fresh probe below important Fibo support at 149.22 (50% retracement of 139.57/158.87 ascend) looks for final weekly close below this level (after repeated failure in past two weeks) to confirm bearish signal for deeper drop towards 146.95 (Fibo 61.8%).

Bearish momentum remains strong on daily chart, with the latest formation of 30/200 death cross, adding to bearish near-term structure.

Broken Fibo level at 149.22 reverted to resistance and should keep the upside protected, to avoid scenario of repeated failure to register weekly close below here and boost signals of bear-trap formation.

Res: 148.69; 149.22; 149.50; 150.00.
Sup: 147.56; 146.95; 146.49; 146.00.

As the XAU/USD chart indicates, gold prices have risen in the early days of March.

Bullish sentiment is being driven by:

→ Investor positioning ahead of key US labour market data – the Non-Farm Employment Change report (due Friday at 16:30 GMT+3), which could provide insights into the Federal Reserve’s interest rate trajectory.

→ Trump’s tariff announcements, adding to global trade tensions – According to The Wall Street Journal, recession fears are resurfacing among market participants. Meanwhile, Barron’s draws a parallel between Trump’s tariffs and the 1930 Smoot-Hawley Tariff Act, which is widely blamed for deepening the Great Depression.

Technical Analysis of the XAU/USD Chart

Gold prices in 2025 are forming an ascending channel (marked in blue).

From a bearish perspective, we observe:

→ A break below an intermediate bullish trendline (shown in orange).

→ The median line of the channel acting as resistance (indicated by an arrow).

→ A bearish Quasimodo pattern (labelled near key price extremes).

From a bullish perspective, gold remains within the blue ascending channel, suggesting that its lower boundary could act as support. If this holds, bulls may attempt to push prices higher towards the key $3,000 psychological level.

However, market direction will largely depend on the broader news backdrop, particularly developments in geopolitics and global trade policy.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Market picture

Crypto market capitalisation returned to the $3 trillion area towards the end of the week ahead of the first crypto summit in the Oval Office. In the short term, buyers on downturns were strong enough to buy back two powerful selloffs. However, an important test of the previous support level at $3.15 trillion is ahead.

Sentiment is moving away from the low point but remains in formal extreme fear territory at the 25. As intended by the creators of such indices, a recovery from this area represents a buying opportunity. We still consider the market reaction after Friday’s summit to be an important confirmation signal.

Bitcoin is gaining for the third day, having pushed off from support in the form of the 200-day moving average. The ascent is more measured this time compared to the market pumping last weekend. But we are cautious of talking about a bullish victory until BTCUSD breaks above the 50-day moving average, which is now at $97,000.

Ethereum is trading near $2300 and trying to break out, but for now, it remains below levels before the Republicans won the election in November. So far, its momentum should be characterised as a technical rebound after a strong selloff rather than the start of a recovery.

News background

Trump will announce a ‘significant’ change in crypto policy, including plans for a Bitcoin Strategic Reserve at a White House summit on 7 March, US Secretary of Commerce Howard Lutnick said. Bitcoin will receive ‘special status’, and other cryptocurrencies will also be treated ‘positively’, he said.

Mexican billionaire Ricardo Salinas said that 70% of his investment portfolio is allocated to Bitcoin-related assets. The remaining 30% comes from gold and gold mining companies.

Despite BTC falling below $90,000, El Salvador expanded its national bitcoin reserve by 19 BTC, again deviating from its plan to buy one coin per day. El Salvador’s president said the country will continue to accumulate bitcoins despite pressure from the IMF.

CryptoQuant calculated that the unrealised gains of market participants holding between 1,000 ETH and 10,000 ETH have turned negative, showing the worst levels since the previous bear market.

Eurozone retail sales volume dropped by -0.3% mom in January, missing expectations of a modest 0.1% mom increase. The decline was driven by weaker demand for non-food products, which fell -0.7% mom, while sales of automotive fuel also slipped by -0.3% mom. In contrast, spending on food, drinks, and tobacco rose by 0.6% mom, offering a slight offset to the overall decline.

Meanwhile, retail sales across the broader EU fell -0.2% mom on the month. Among individual EU, Slovakia saw the sharpest contraction, with retail trade volume plunging -9.0%, followed by Lithuania (-4.8%) and Cyprus (-2.2%). On the other hand, Slovenia (+2.3%), Hungary (+2.2%), and the Netherlands (+1.6%) recorded the strongest increases.

Full Eurozone retail sales release here.

• An aggressive fiscal spending proposal by Germany has attracted bullish animal spirits into EUR/USD.
• A significant rally in the longer-end German Bund yields is likely to alter ECB monetary policy guidance towards a “less dovish stance.”
• The three-month rally in the EUR/USD has reached overbought condition, at risk of a minor corrective pull-back below 1.0885/0940.

In the upcoming European Central Bank (ECB) meeting on Thursday, 6 March, where market participants are expecting another 25 basis points (bp) cut, its sixth reduction to reduce the key policy deposit rate to 2.50%, also a two-year low.

Our prior report dated 4 December 2024 highlighted, “The medium-term downtrend of EUR/USD remains intact, but a mean reversion corrective rebound may occur first below 1.0770 key medium-term resistance.”

The EUR/USD has rebounded by 6.2% as expected from its intraday low of 1.0178 printed on 13 January to Thursday, 5 March, with the current intraday level of 1.0811 at this time of the writing. The “Trump Trade” of a stronger US dollar ex-post US presidential election riding on the coattails of rising longer-term US Treasury yields due to deeper corporate tax cuts that tend to widen the US budget deficit as well as a potential myriad of trade tariffs against major US trading partners has been evaporated.

The EUR/USD is now trading at levels close to the day of the US presidential election on 5 November 2024. Geopolitics and a change of fiscal policy stance in Germany are the key catalysts driving the ongoing rally in the Euro.

New aggressive fiscal stimulus plan from Germany

Germany’s newly elected incoming Chancellor Friedrich Merz has campaigned on a more expansionary fiscal policy, a radical shift away from his predecessors that championed on fiscal austerity policies.

Merz has proposed the biggest government spending spree since reunification in 1990. Defense and infrastructure outlays could amount to approximately 1 trillion euros, around 20% of GDP. Also, the new coalition government is set to relax the Berlin “debt brake” fiscal rule in the constitution to exempt defense spending above 1% of the GDP output.

Geopolitics also play a significant role in the latest crafting of an aggressive defense expenditure plan for Germany. US President Trump has signaled that the US is not willing to provide a solid security guarantee to Ukraine in any US brokered peace deal to end the three-year Russia-Ukraine war.

Higher fiscal spending allows ECB to be less dovish

Fig 2: 10-year yield spread of German Bund/US Treasury Note with EUR/USD as of 6 Mar 2025 (Source: TradingView, click to enlarge chart)

The ECB may provide a less dovish guidance after today’s monetary policy decision meeting during President Lagarde’s press conference, as Germany’s aggressive expansionary fiscal policy can do the “heavy lifting” to reverse the Eurozone’s sluggish growth trajectory in the past two years.

Hence, the ECB is likely at the tail-end of its current interest rate cutting cycle where the German Bund market has responded strongly to a potential upcoming change in Eurozone’s monetary policy stance. The longer-end 30-year German Bund yield jumped by around 25 bps to 3.08% on Wednesday, 5 March, its biggest daily increase since October 1998.

The 10-year yield spread between the German Bund and the US Treasury Note has tracked closely with the movement of the EUR/USD in a direct correlation fashion (see Fig 1).

The current uptick in the 10-year German Bund/US Treasury Note yield spread may see further upside to test its key long-term secular resistance at -1.35%, which translates to a further potential upmove in the EUR/USD towards a parallel long-term secular resistance level of 1.1040 in the coming weeks (see Fig 1).

Overbought condition reached in EUR/USD, at risk of an imminent pull-back below 1.0885/0940

Fig 2: EUR/USD medium-term & major trends as of 6 Mar 2025 (Source: TradingView, click to enlarge chart)

In the lens of technical analysis, price actions of highly liquid traded instruments do not move vertically but oscillate within trends.

The recent three-month rally seen in the EUR/USD has reached an overbought condition as indicated by its daily RSI momentum indicator, and its price actions are coming close to a former major ascending trendline support from 3 October 2023 low now turns into a pull-back resistance at 1.0885/0940.

Thus, the next probable move in the EUR/USD is likely a minor corrective pull-back within a medium-term uptrend phase. The first support to watch in this potential minor corrective pull-back sequence will be at 1.0730 (also the 200-day moving average), followed by the 1.0600 key medium-term pivotal support (also the 20-day moving average) to maintain the current medium-term uptrend phase in place since the 13 January 2025 low (see Fig 2).

On the flip side, another swift rally above 1.0940 sees a squeeze up towards the 1.1010/1040 long-term secular resistance.

Daily Pivots: (S1) 191.13; (P) 191.73; (R1) 192.57; More...

Intraday bias in GBP/JPY remains neutral as range trading continues. On the upside, firm , fir break of 193.04 will resume the rebound from 187.04 to 194.73 resistance, and then 198.94. On the downside, firm break of 187.04 will extend the fall from 199.79 towards 180.00 support. Overall, corrective pattern from 180.00 might still be extending.

In the bigger picture, price actions from 208.09 are seen as a correction to rally from 123.94 (2020 low). Strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. However, sustained break of 152.11 will bring deeper fall even still as a correction.

Daily Pivots: (S1) 159.32; (P) 160.03; (R1) 161.32; More...

Intraday bias in EUR/JPY stays on the upside for the moment. Rise from 154.77 is seen as another rising leg in the corrective pattern from 154.40. Further rally should be seen towards 164.89 resistance. On the downside, below 159.52 minor support will turn intraday bias neutral first.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). Strong support should be seen from 38.2% retracement of 114.42 to 175.41 at 152.11 to contain downside. However, sustained break of 152.11 will bring deeper fall even still as a correction. Next target will be 100% projection of 175.41 to 154.40 from 166.67 at 145.66.

Daily Pivots: (S1) 0.8316; (P) 0.8349; (R1) 0.8398; More...

Intraday bias in EUR/GBP stays on the upside for the moment. Rise from 0.8239 is seen as the third leg of the pattern from 0.82210. Sustained break of 1.8% retracement of 0.8472 to 0.8239 at 0.8383 will target 0.8472 resistance next. On the downside, below 0.8345 minor support will turn intraday bias neutral first.

In the bigger picture, EUR/GBP is still bounded inside medium term falling channel. While rebound from 0.8221 might extend higher, it could still develop into a corrective pattern. Overall outlook will be neutral at best and down trend from 0.9267 (2022 high) could extend, at least until decisive break of channel resistance (now at 0.8511).