During the European trading session, the EUR/USD pair has maintained its upward trend, remaining well bid around the $1.0825 level and hitting an intraday high of $1.0835.

Despite the Federal Reserve’s hawkish stance, signaling a willingness to tighten monetary policy, the US dollar has faced challenges, which has provided support for the EUR/USD currency pair.

Federal Reserve’s Stance on Inflation and Its Impact on Currency Markets

On the US front, Federal Reserve Chairman Jerome Powell indicated that inflation is decreasing slower than anticipated, supported by recent Producer Price Index (PPI) data. Powell suggested that while further interest rate hikes are unlikely, the chance of rate cuts has also diminished. Kansas City Fed President Jeffrey Schmid emphasized that inflation levels remain too high, indicating continued efforts from the central bank to address this issue. These hawkish comments could strengthen the US dollar and put short-term pressure on the EUR/USD pair.

Investors are now keenly awaiting the US Consumer Price Index (CPI) data for further insights. A hotter-than-expected CPI reading could diminish hopes for a Fed rate cut this year, potentially boosting the US dollar against the Euro.

Impact of Upbeat Eurozone Economic Sentiment and GDP Growth Expectations on EUR/USD Pair

The positive ZEW Economic Sentiment Survey results have also bolstered the EUR/USD pair. The Eurozone ZEW Economic Sentiment Survey improved to 47.0 in May from 43.9 in April, surpassing expectations set at 46.1. This sentiment reflects growing optimism among financial experts and investors regarding the Eurozone’s economic outlook.

Attention now shifts to the upcoming European GDP growth numbers. Analysts expect Eurozone GDP to grow by 0.3% quarter-on-quarter in Q1, with annualized GDP growth forecasted to hold steady at 0.4% year-on-year. These figures will provide further insights into the Eurozone’s economic recovery trajectory. Positive GDP growth numbers could strengthen the EUR/USD pair, while any disappointments may lead to a temporary reversal for the Euro against the US dollar.

EUR/USD Price Forecast: Technical Outlook

EUR/USD is currently trading at $1.08233, showing a slight increase of 0.04% for the day. The 4-hour chart reveals crucial levels that could influence the pair’s direction. The pivot point, highlighted in green, is at $1.08140, serving as a key reference level for traders.

Immediate resistance is identified at $1.08423, with further resistance at $1.08630 and $1.08835. A break above these levels would indicate stronger bullish momentum, potentially leading to further gains. Conversely, immediate support is found at $1.07897, followed by $1.07669 and $1.07386. Falling below these support levels could signal a bearish reversal.

Technical indicators provide additional insights into the market conditions. The Relative Strength Index (RSI) is at 66, suggesting that the market is nearing overbought territory but still has room for further upward movement. The 50-day Exponential Moving Average (EMA) is at $1.07843, which aligns closely with the current price, reinforcing the medium-term bullish trend.