The trading of the EUR/USD currency pair is stable around the 1.1370 level. It has retraced a bit from Monday’s high of 1.1420. However, no matter this little retreat, market analysts claim that EUR/USD is not even close to becoming bearish. From the duo’s purring performance emerges a potent cocktail of economic currents. This has taken the form of dramatic changes in U.S. fiscal policy and increasing concern about inflation.
Traders have noticed a bullish divergence on the 4 hour chart for the EUR/USD. They tend to almost always find support near the 20 Simple Moving Average (SMA). This shorter-term SMA is still above the longer-term averages and a continuation of this upward momentum in the short-term is likely. Recent price action shows that the duo has formed a new lower high and a new daily lower low. That reveals some deep-seated volatility in the market.
Continuing low market sentiment largely due to sentiments created by U.S. President Donald Trump’s tariffs and tax reform have played a role. All these factors aggravate and undermine investors’ confidence. Although some positive economic headlines have emerged, they are insufficient to counteract the prevailing fears of rising inflation and a widening fiscal deficit. These issues create a more reserved environment among traders who engage with the EUR/USD.
The technical indicators paint a mixed picture for EUR/USD. Price trading well above the mentioned line, currently at around 1.1270. At the same time, 100 SMA is still climbing above the 200 SMA. This type of alignment is often an early warning indicator of buyer control, offering a measure of comfort to traders active in the currency pair. Traders need to stay on their toes since new support levels are being formed at 1.1330, 1.1270 and 1.1240.
Francois Villeroy de Galhau, the head of the Bank of France, has signaled a preference for an early rate cut. That would make an already delicate economic situation even more difficult. His remarks seem to suggest that the normalization of interest rates in the eurozone has only just begun. This potential exacerbates the effect that euro/dollar trading has on the euro’s real world performance.
As traders watch for these big developments, it’s important not to lose sight of how outside factors can affect where the smart trading bets should be placed. The combination of political uncertainty in the U.S., potential shifts in European monetary policy, and ongoing inflation concerns create an intricate web of considerations for anyone involved in trading the EUR/USD currency pair.