EUR/USD Falls Amid US Dollar Strength and Market Uncertainty: Fed-ECB Policy Decisions in Focus
EUR/USD fell sharply to around 1.0420 after the US dollar gained strength amid a risk-off environment fueled by a global sell-off in technology and data center stocks. The safe-haven appeal of the Greenback has surged on account of uncertainty regarding US Treasury Secretary Scott Bessent’s proposed universal tariff plan and the impending monetary policy decisions from the Federal Reserve and the European Central Bank (ECB). The Fed is expected to hold interest rates unchanged while the ECB is expected to cut its Deposit Facility rate by 25 bps, with a rather dismal Eurozone economic outlook. Investors are closely monitoring Fed Chair Jerome Powell’s press conference and ECB President Christine Lagarde’s comments for future policy guidance and potential impacts of US tariffs. Key technical levels for EUR/USD include support near 1.0266 and resistance around 1.0630, with the pair trading cautiously near its 50-day EMA at 1.0456. KEY LOOKOUTS • The market will be looking to the Federal Reserve’s interest rate decision and the European Central Bank’s expected 25 bps rate cut for direction. • The US Dollar Index (DXY) shoots up to nearly 108.00, with global risk-off sentiment influencing EUR/USD and promoting cautious trading in the currency pair. • The uncertainty over the proposed 2.5% universal tariff hike is fueling market volatility and affecting global trade dynamics and the economic outlook of the Eurozone. • Key support for EUR/USD lies near 1.0266, while resistance is at 1.0630, with the pair struggling to hold above its 50-day EMA around 1.0456. EUR/USD continues to face pressure, falling near 1.0420 as the US Dollar strengthens on safe-haven demand amid a global sell-off in technology stocks and uncertainty over US Treasury Secretary Scott Bessent’s proposed universal tariff hike. Market participants are focused on this week’s monetary policy decisions, with the Fed likely to hold rates steady and the European Central Bank most likely to cut its Deposit Facility rate by 25 basis points due to the latest sluggish Eurozone economy. The two most important items investors are following are Fed Chair Jerome Powell’s and ECB President Christine Lagarde’s press conferences for insight into future monetary policy and the effect Trump’s tariff plan will have on the global economic outlook. Key technical levels, which include support at 1.0266 and resistance near 1.0630, will set the course of EUR/USD in the short term. EUR/USD falls to around 1.0420 as the US Dollar gains strength in a risk-off environment and global market sell-offs. Investors are looking for Fed and ECB policy decisions for future direction. Key support is at 1.0266, while resistance is near 1.0630. • The pair fell sharply to around 1.0420 as the US Dollar gained strength in a risk-off environment. • The DXY jumped to 108.00 as global sell-offs in technology and data center stocks have amplified the ‘Safe Haven’ appeal. • The Feds are expected to keep interest rates unchanged. Focus is on the Jerome Powell ‘Press Conference’ for future guidance. • The European Central Bank is expected to cut its Deposit Facility rate by 25 bps due to the poor Eurozone economic outlook. • Uncertainty over US Treasury Secretary Scott Bessent’s proposal for a 2.5% universal tariff hike adds to market volatility. •EUR/USD struggles near the 50-day EMA of 1.0456, with key support at 1.0266 and resistance around 1.0630. • Markets remain cautious, closely monitoring global economic policies and central bank decisions for future market direction. EUR/USD has declined sharply to around 1.0420 after the US Dollar went on a risk-off rally with global sell-offs in technology and data center stocks. The DXY rallied to 108.00 and was also inspired by the safe-haven trend due to some increased market uncertainty. The world is still watching monetary policy announcements from the Federal Reserve and the European Central Bank. While the Fed is anticipated to keep their interest rates where they are now, markets eagerly await Jerome Powell’s press conference for any forward guidance. On the other hand, the ECB is expected to lower its Deposit Facility rate by 25 basis points, reflecting poor Eurozone economic performance and inflationary pressures returning to target. EUR/USD Daily Chart TradingView Prepared by ELLYANA The uncertainty surrounding a universal tariff plan by US Treasury Secretary Scott Bessent for a 2.5% hike and later increase has only added to market volatility. As a result of the plan, alongside weak investor sentiment, the Euro lost its grounds. According to key technical levels, it can be determined that EUR/USD is supporting at 1.0266, however, resistance stays at 1.0630. The pair now trades near the 50-day EMA that stands at 1.0456. As markets await clarity from central banks and potential impacts of the US tariff plan, cautious trading is likely to persist, leaving EUR/USD vulnerable to further fluctuations. TECHNICAL ANALYSIS EUR/USD is struggling to maintain momentum above the 50-day Exponential Moving Average (EMA), which currently trades near 1.0456. The pair has failed to sustain gains above the key resistance level of 1.0530, signaling bearish pressure. On the flip side, critical support is observed around 1.0266 where the January 20 low locates, which further supports bearishness following the downward-sloping trend from the September 2024 high that recorded 1.1209. The14-day Relative Strength Index (RSI) is situated below the crucial hurdle of 60.00, indicating the trend is generally sideways with a bearish bias. A drop below 1.0390, the 20-day EMA, would accelerate the bears, while a strong breakout above 1.0630 would be required to allow bulls to take over. FORECAST If EUR/USD is to recover now, it needs to break above the immediate resistance level 1.0530, which has acted as a stubborn barrier in last few sessions. Once this level breaks away from the pair’s back, it will then open the way up towards the December 6th high of 1.0630. If it succeeds in breaking this strong resistance area, the pair may sustain further buying on board, targeting the psychological level of 1.0700. The stock market reaction of positive ECB developments, such as a less dovish tone from President Christine Lagarde, will be more fuel