Daily Price Outlook
During Friday’s European session, the EUR/USD pair continued to hold steady near the 1.1320 mark, supported by a weakening US Dollar amid rising expectations of a Fed rate cut and renewed trade optimism. The euro remains firm as upbeat Eurozone inflation data adds to the currency's appeal, even as the broader economic outlook remains cautious.
EUR/USD Supported by Weak USD and Easing Trade Tensions
The EUR/USD strength is largely attributed to a broad decline in the US Dollar, which is under pressure despite signs of easing trade tensions between the US and China.
Market sentiment improved after the Chinese Commerce Ministry signaled openness to resuming trade talks with Washington, urging the US to demonstrate sincerity.
Meanwhile, US President Donald Trump also expressed optimism about potential trade agreements with South Korea, Japan, and India, boosting global risk appetite.
Although easing trade tensions typically support the USD by improving consumer confidence and reducing inflationary risks, caution ahead of the US Nonfarm Payrolls (NFP) report kept the greenback under pressure.
Economists expect the US economy to add only 130K jobs in April, well below the previous reading of 228K. The Unemployment Rate is expected to hold at 4.2%, while wage growth is projected to rise 0.3% monthly and 3.9% annually.
Euro Gains on Hotter-Than-Expected Eurozone Inflation Data
Moreover, the pair was further boosted by stronger-than-expected preliminary inflation figures from the Eurozone. According to Eurostat, the core Harmonized Index of Consumer Prices (HICP) rose by 2.7% year-on-year in April, beating the forecast of 2.5%. The headline HICP also surprised to the upside, increasing 2.2% annually. On a monthly basis, core and headline HICP jumped by 1.0% and 0.6%, respectively, indicating persistent price pressures in the bloc.
Despite the inflation surprise, the European Central Bank (ECB) is still expected to proceed with a 25 basis point rate cut in June. Policymakers remain more concerned about the economic impact of new US tariffs than inflation itself. Earlier this week, ECB’s Olli Rehn stressed the need for policy expansion and did not rule out cutting rates below the neutral level if necessary, highlighting downside risks to inflation.
EUR/USD Outlook Hinges on NFP and Central Bank Policy Expectations
Looking ahead, the EUR/USD pair’s direction will be influenced by the outcome of the US NFP report and evolving market expectations for both the Fed and ECB.
According to the CME FedWatch tool, there’s now a 58.6% probability that the Fed will lower rates in June, following a steady policy in May.
With Eurozone inflation running hotter but growth still vulnerable, any soft US data could further pressure the USD and provide near-term support to EUR/USD around the 1.1300 level.
EUR/USD – Technical Analysis
EUR/USD is trading within a well-defined descending channel, attempting a mild recovery after bottoming near $1.12676. Price is currently approaching short-term resistance near $1.13466, a level that previously acted as support.
While a small bullish impulse has developed, the pair remains below the 50-SMA at $1.13694, which continues to slope downward—reinforcing bearish pressure in the medium term.
From a candlestick perspective, the pair has not yet shown convincing bullish formations like three white soldiers, and the latest candles resemble neutral bodies rather than strong directional signals.
The RSI has turned up from oversold levels and now sits at 44.84, reflecting short-term recovery momentum. However, unless the pair clears the upper boundary of the bearish channel and sustains above the $1.13466 zone, the upside is likely to remain capped.
The broader structure still favors a continuation to the downside, especially if price fails at the current resistance and prints a bearish engulfing or another reversal signal near the 50-SMA.
A break below $1.13466 could reactivate bearish momentum toward $1.12676 and potentially $1.12285. On the flip side, a confirmed push above $1.13901 would challenge this outlook and suggest short-term trend reversal.
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