EUR/USD Price Analysis – April 25, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair traded lower near 1.1350 as the US Dollar (USD) gained strength. This was due to increasing optimism about possible improvements in US-China trade relations.
Moreover, the Euro's weakness was also driven by concerns about the European Central Bank's (ECB) monetary policy, with growing speculation that the ECB might cut interest rates soon.
US Dollar Strengthened by Optimism Over US-China Trade Talks
On the US front, the US Dollar Index (DXY), which measures the Greenback's value against six major currencies, rebounded from a previous correction near 99.20 and surged back towards 99.65, eyeing the weekly high of around 100.00.
This recovery was driven by optimism in the financial markets that the trade war between the US and China may de-escalate.
Bloomberg reported that China is considering suspending the 125% tariff on US medical equipment and industrial chemicals. US President Donald Trump echoed this sentiment, stating that trade talks with Beijing were progressing positively, and expressing hope that a deal could be reached soon.
Despite these signs of progress, China denied that any significant economic and trade negotiations were taking place. A Chinese spokesperson clarified that the US would need to completely cancel all unilateral tariffs if trade talks were to continue.
These mixed signals from both countries have added to the market’s uncertainty, yet the initial optimism over potential trade de-escalation continues to support the US Dollar’s strength.
Euro Under Pressure Amid ECB Concerns on Inflation and Economic Outlook
On the Eurozone front, the Euro came under pressure as concerns about the ECB’s monetary policy outlook mounted. ECB policymakers have expressed increasing worry about the region’s economic prospects, particularly the risk of inflation undershooting the central bank’s 2% target.
Finnish central bank governor Olli Rehn highlighted these concerns, stating that inflation projections could remain below target in the medium term and suggesting that current circumstances might justify an interest rate cut in June.
Looking ahead, the future direction of EUR/USD will likely be influenced by developments in both US-China trade relations and the ECB’s monetary policy stance.
While the US Dollar could continue to gain strength on optimism surrounding trade talks, concerns about inflation and economic growth in the Eurozone are likely to weigh on the Euro.
EUR/USD – Technical Analysis
The EUR/USD is currently testing the lower boundary of a descending wedge, reinforced by a bullish harmonic pattern (likely a bullish Gartley) forming at point D near $1.13085.
Price action has been contained within the wedge since April 19, and recent support at $1.1309 marks a potential reversal zone. A bullish bias emerges if the pair breaks decisively above $1.13092.
Candle structure supports this view, with buyers repeatedly defending the 1.1300 zone. A clean break above the wedge resistance could push prices toward the 50-hour SMA at $1.13596, followed by the next key level at $1.13962.
The 50 SMA continues to slope downward but is flattening—an early sign of potential crossover reversal if bullish momentum accelerates.
The Relative Strength Index (RSI) is printing 39.03, rising from oversold territory. While no bullish divergence is confirmed yet, the oscillator’s uptick indicates waning bearish momentum. Additionally, the recent hammer and spinning top near support add to bullish reversal cues.
A failure to hold above $1.13085 may invalidate the bullish setup, exposing the pair to deeper losses toward $1.12788 and ultimately $1.12666.
However, the harmonic completion and wedge compression suggest an imminent volatility breakout, favoring bullish scenarios if volume confirms.
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