EUR/USD Price Analysis – April 23, 2025
Daily Price Outlook
The EUR/USD currency pair failed to stop its downward trend and remains under pressure below the 1.1400 mark during the European trading session. However, the reason for its bearish rally can be linked to the stronger US dollar. The US Dollar Index (DXY), which tracks the USD’s value against six major currencies, has climbed back to around 99.30 from its low of 98.00.
However, the strength of the Greenback can be attributed to several factors, including improved market sentiment towards the USD following US President Donald Trump’s statements and ongoing economic concerns in the Eurozone.
US Dollar Strengthens as Trump Expresses Optimism and Safeguards Fed’s Autonomy
On the US front, the US Dollar has regained traction as President Donald Trump expressed confidence in finalizing a trade deal with China. His remarks on trade negotiations, though not providing details about potential tariff reductions, helped to stabilize the market sentiment.
Furthermore, Trump's statement about not intending to fire Federal Reserve Chair Jerome Powell despite previous criticisms provided a sense of reassurance.
This has alleviated some concerns over the US Dollar’s credibility, which had been under pressure due to the uncertainty surrounding tariff policies and the Fed’s monetary stance.
However, Trump also voiced his frustration with the Federal Reserve's decision to keep interest rates unchanged, creating a tug-of-war between the executive and the central bank. Despite this, the overall sentiment remains positive for the USD, benefiting from its safe-haven status amid global uncertainties.
Euro Under Pressure Amid Weak Economic Data and ECB Rate Cut Speculations
On the flip side, the Euro has come under pressure as economic data from the Eurozone paints a grim picture. Preliminary April data from Hamburg Commercial Bank (HCOB) revealed a decline in business activity, with the Composite Purchasing Managers’ Index (PMI) falling to 50.1 from 50.9 in March.
Hence, the reading below 50.0 would indicate contraction, though the Eurozone economy has just avoided this threshold. Notably, the Service PMI dropped unexpectedly to 49.7, showing that the service sector is weakening more than anticipated.
The Manufacturing PMI, however, performed slightly better, coming in at 48.7, signaling slower-than-expected contraction.
ECB Rate Cut Expectations Weigh on the Euro
As a result of the weaker economic performance and persistent inflation concerns, market participants are growing increasingly confident that the European Central Bank (ECB) may opt for another rate cut in its upcoming June policy meeting.
ECB President Christine Lagarde recently mentioned that inflation might return to 2% by the end of the year, which has led to more speculation about rate cuts. Although Lagarde didn't confirm this directly, the chances of further rate cuts are putting pressure on the Euro.
EUR/USD – Technical Analysis
EUR/USD has shifted to a bearish bias after failing to hold above the 50-period SMA at 1.1431. The pair has broken below key support at 1.1403, which is now acting as short-term resistance.
This breakdown, paired with the rejection from the $1.1450 zone, suggests bearish continuation if price sustains below the 1.1403 pivot.
The RSI reading at 39.25 confirms momentum has turned bearish, with room for further downside before reaching oversold conditions.
The recent bearish candlestick pattern (a strong red candle closing below the 50-SMA and horizontal support) provides additional confirmation of the trend shift.
The pair is now eyeing a retest of the rising trendline support near 1.1309. If that breaks, the next support lies at 1.1265. On the flip side, a close above 1.1451 would invalidate the bearish setup and suggest a possible rebound.
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