The EUR/USD pair continues to consolidate around 1.1371 this Friday, with trading activity subdued due to Good Friday market closures in the US and most of Europe.
Key Drivers of EUR/USD Movement
With low trading volumes, the pair’s movements remain constrained, leaving it near its three-year peak. Recent USD weakness stemmed from two primary factors:
- Concerns over the impact of US tariff policies.
- Growing political uncertainty under the Trump administration.
However, sentiment appears to be stabilising as the US engages in trade discussions with key partners, including Japan and Italy. President Trump hinted yesterday at a potential easing of trade tensions with China, suggesting he may halt further tariff hikes and even consider reductions in the future.
Simultaneously, Trump has sharpened his criticism of Federal Reserve Chairman Jerome Powell, expressing frustration over the slow pace of interest rate cuts. He emphasised, however, that Powell’s resignation is unlikely to happen soon.
On the data front, yesterday’s US jobless claims fell to a two-month low, reflecting the enduring strength of the labour market. Meanwhile, the ECB cut interest rates for the seventh consecutive time, adding further nuance to the currency dynamic.
Technical Analysis: EUR/USD
H4 Chart Outlook
- The pair is consolidating near 1.1333, with a potential Triangle pattern forming.
- A decline to 1.1280 is anticipated, followed by a possible rebound to 1.1370 before another drop toward 1.1250.
- This scenario is technically supported by the MACD, where the signal line remains above zero but points firmly downward.
H1 Chart Outlook
- The pair completed a downward wave to 1.1264, then corrected to 1.1412.
- Today, focus remains on a further decline to 1.1250. A breach here could open the door for a third wave of decline, targeting 1.1080, with potential extension to 1.1030.
- The Stochastic oscillator aligns with this view, as its signal line sits below 80 and trends sharply downward toward 20.
Conclusion
With markets quiet for Good Friday, EUR/USD remains range-bound. However, technical indicators suggest downside risks in the near term, contingent on key support breaks. Traders should monitor US-China trade developments and Fed policy rhetoric for directional cues.
