- The EUR/USD price analysis shows the euro rebounding after a brief pause.
- Market participants look forward to a likely European Central Bank rate cut on Thursday.
- The US will release its retail sales report.
The EUR/USD price analysis shows the euro rebounding after a brief pause. The pause followed a strong rally as investors shifted from US to Eurozone assets amid economic uncertainty. However, after booking profits, traders are back for another rally.
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The euro gained last week as Trump’s wild tariff decisions plunged investor confidence in US assets. As a result, there was a migration to the Eurozone, which seemed to be a more stable economy. Trump’s tariffs have increased the likelihood of a US recession. The trade war between China and the US has put both economies in vulnerable positions.
However, there was some relief when Trump paused reciprocal tariffs for 90 days. Moreover, the dollar recovered slightly at the start of the week when Trump exempted smartphones and computers from tariffs.
Elsewhere, data on Tuesday revealed that investor morale in Germany fell due to tariff concerns. Meanwhile, market participants look forward to a likely European Central Bank rate cut on Thursday. The move will further sell Eurozone assets as the best substitute for US assets.
On the other hand, market participants await the US retail sales report for clues on Fed policy. An upbeat report will indicate solid consumer spending, easing Fed rate cut bets. Meanwhile, a downbeat report will pressure the Fed to lower borrowing costs.
EUR/USD key events today
- US core retail Sales m/m
- US retail sales m/m
- Fed Chair Powell speaks
EUR/USD technical price analysis: RSI shows bulls might need a break
On the technical side, the EUR/USD price is climbing after pulling back to retest the 1.1302 key level. It trades above the 30-SMA, with the RSI above 50, suggesting a bullish bias. The uptrend recently soared past the 1.1302 resistance to make a higher high.
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However, while this happened, the RSI made a lower high, indicating a bearish divergence. This signals weaker bullish momentum. It shows bulls need a break to regain momentum before the uptrend continues.
Therefore, EUR/USD might not break past the 1.1502 resistance. It might consolidate for some time before either making higher highs or reversing to the downside. A break above 1.1502 will strengthen the bullish bias.
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Saqib Iqbal
