EUR/USD Market Update: Dollar Strength Pressures Euro Amid Mixed Fed & Trade Signals

Overview: The EUR/USD pair continues to edge lower, trading near the 1.0800 psychological level in Friday’s European session. A renewed wave of demand for the US Dollar, fueled by cautious risk sentiment and hawkish tones from Fed Chair Jerome Powell, has weighed on the Euro. Meanwhile, political and fiscal uncertainty in Germany, along with upcoming Fed and ECB commentary, keeps traders on edge.

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📊 Technical Breakdown – EUR/USD

• Current Price: ~1.0800
• Short-Term Resistance:
  • 1.0954 – Year-to-date high (March 18)
  • 1.0969 – 23.6% Fibonacci retracement
  • 1.1000 – Psychological resistance
• Immediate Support Levels:
  • 1.0728 – 200-day Simple Moving Average
  • 1.0522 – 100-day SMA
  • 1.0498 – 55-day SMA
  • 1.0176 – 2025 bottom (January 13 low)

📈 Momentum Indicators:

• RSI: Holding near 62 – modest bullish bias
• ADX: ~32 – indicating strengthening trend conditions

Note: You can insert the 4-hour EUR/USD chart here once downloaded from TradingView.

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🏛️ Fundamental Drivers

🔺 US Dollar Rebound

• The DXY crossed back above 104.00 after Fed Chair Powell struck a cautious tone during his recent speech.
• Despite expectations of two rate cuts in 2025, Powell emphasized inflation could remain sticky due to rising import tariffs, delaying further easing.

🔻 Euro’s Pressure Points

• Ongoing uncertainty over Germany’s upper house vote on a new spending package has capped Euro gains.
• Fiscal reforms aimed at infrastructure investment and defense spending could support EUR longer-term if passed.

🌐 Geopolitics & Trade Tensions

• Markets remain wary of Trump’s aggressive trade policy revival, especially threats of broader tariffs by April.
• Fed’s cautious approach reflects fear of imported inflation due to tariffs — a sentiment echoed by the ECB.

🕊️ Russia-Ukraine Peace Developments

• A potential 30-day ceasefire between Russia and Ukraine has been tentatively agreed upon, providing modest support for the Euro and risk assets.

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🧠 ECB vs. Fed – Diverging Paths?

• ECB: Recently cut rates by 25 bps and may continue easing if risks persist. President Lagarde highlighted trade war risks but remains confident in fiscal stimulus.
• Fed: Held rates steady; raised inflation outlook to 2.7% and trimmed growth forecast to 1.7%. Powell sees no urgency to cut further unless economic conditions worsen.

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🔮 What to Watch Next:

• Germany’s Upper House vote on fiscal reform
• ECB President Lagarde speeches and commentary
• US economic data including jobless claims and inflation prints
• Tariff developments and global trade updates

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📌 EUR/USD Outlook Summary:

The pair’s downside bias could intensify if 1.0800 fails to hold, opening the door toward 1.0728 and deeper support levels. Conversely, sustained recovery above 1.0900 could lead to another test of 1.0954. Traders should remain cautious heading into the weekend as event risk from both sides of the Atlantic remains elevated.

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