April 21, 2025 – DailyForex.pk
The Euro (EUR) surged past the 1.1500 level against the US Dollar (USD) for the first time since November 2021, climbing over 1% during Monday’s Asian session. The move comes amid renewed selling pressure on the greenback, driven by concerns over Federal Reserve independence, stagflation risks, and escalating US tariffs.
As traders flee the US dollar, the EUR/USD pair rallied sharply, reaching a session high near 1.1517 and setting the tone for a potentially extended upside trend.
📈 EUR/USD Technical Outlook: Next Resistance at 1.1498, $1.1500 Broken
- Immediate Resistance: 2025 high of 1.1473, followed by February 2022 peak at 1.1498, which has now been cleared
- Next Psychological Barrier: 1.1550–1.1600 zone, with 1.1500 acting as new support
- Key Support Levels:
- 200-day SMA at 1.0753
- Weekly low at 1.0732 (March 27)
- 55-day SMA providing structural reinforcement
The Relative Strength Index (RSI) has cooled slightly to 69, exiting overbought territory, while the ADX above 46 confirms a strong and sustainable uptrend.
📉 Fundamentals: Tariffs, Fed Uncertainty, and Eurozone Divergence
🇺🇸 US Dollar Weakness Intensifies
The US dollar index (DXY) remains under pressure as:
- President Trump imposed blanket 10% tariffs on all trade partners, with additional duties up to 145% on Chinese goods
- A 90-day tariff pause for non-retaliating countries and temporary exemptions for smartphones and computers failed to calm markets
- Fed Chair Jerome Powell reaffirmed concerns about stagflation, highlighting risks of rising inflation and slowing growth
- Powell stressed the importance of inflation anchoring while downplaying near-term rate cuts despite market pricing in 100bps of easing by year-end
The Fed is trying to maintain credibility and independence, but the administration’s ongoing review of Powell’s status has left investors uncertain.
🇪🇺 ECB Takes a Dovish Turn
The European Central Bank (ECB) delivered a 25-basis-point rate cut, lowering the deposit rate to 2.25% and signaling a shift away from restrictive policy.
- The ECB dropped the term “restrictive” from its statement, signaling a neutral policy stance
- President Christine Lagarde took a dovish tone, suggesting a data-dependent path moving forward
- Markets now anticipate another 25bps rate cut in June, where previously a hold was expected
This divergence in central bank tone has widened the EUR/USD upside window, especially as European officials prepare to retaliate if tariff tensions intensify.
🧮 Positioning: Markets Build Bets on Euro Strength
- Net-long euro contracts have climbed to a 2-week high near 60,000
- Hedge fund net-shorts on USD have expanded to nearly 90,000 contracts
- Open interest has surged to over 700,000 contracts, suggesting fuel remains for a larger directional move
📌 Conclusion: EUR/USD in Focus as Market Eyes 1.1600
With 1.1500 now broken, the EUR/USD pair is poised for further gains, especially if tariff tensions escalate, the Fed signals policy fragility, or European data supports continued resilience.
Key drivers this week include:
- Fed commentary and US data releases
- US-China trade developments and tariff headlines
- Eurozone sentiment indicators and ECB speak
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