EUR to USD Uptrend Under Threat on ECB Interest Rate Cuts

The rate of EUR to USD pair has encountered significant resistance around the 1.10 level for the past month, failing to break above it and now the ECB rate cut comments are weighing on this pair. The trend is still bullish but we might be in the beginning of a shift due to expectations of interest rate cuts by the European Central Bank (ECB), which could start in June as everything indicates.

EUR/USD H4 Chart – MAs Are Still Holding As Support

EUR/USD was showing resilience for about a month, gaining 300 cents, but once again buyers failed to push the EUR/USD price above 1.10 last week. This week they attempted the upside but the price reversed even lower showing that buyers were running out of steam. Then came the reversal and the Euro tumbled more than 100 pips lower, however moving averages are still acting as support, holding the price.

Recent statements from multiple ECB officials suggesting a June rate cut have weighed on the Euro, leading to its softening against the US dollar. This anticipation of monetary policy easing by the ECB has likely contributed to the downward pressure on the Euro in the forex market.

The USD also regained some momentum following stronger-than-expected US Producer Price Index (PPI) data this week, which added to the hawkish outlook on interest rates after last week’s stronger CPI inflation report. This sent EUR/USD down to 1.0873, but the 100 SMA (green0 held as support.

As a result, the EUR/USD pair attempted to bounce off the 100-period Simple Moving Average (SMA) on the 4-hour (H4) chart on Friday. However, buyers were unable to sustain the momentum and failed to push the price above the 1.09 level. This failure to break above 1.09 suggests weakness from buyers, potentially indicating a bearish sentiment in the market for the EUR/USD pair.

EUR/USD Live Chart