On Monday (April 28), the exchange rate of the euro against the US dollar remained in a narrow range around 1.1350, as uncertainties in global trade negotiations restrained the market's trading enthusiasm.
Fundamental Analysis
During the European trading session on Monday, the US dollar rose slightly, continuing the rebound from last week. This week, the main catalyst for the dollar will be a series of US economic data, including the non-farm payrolls report on Friday.
The euro against the US dollar is consolidating, with cautious trading as the market awaits the release of the Eurozone and its main member countries' April Harmonized Consumer Price Index (HICP) data and first-quarter Gross Domestic Product (GDP) data this week. Inflation and economic growth data will significantly impact market expectations for the European Central Bank (ECB)'s monetary policy outlook.
According to market expectations, the overall HICP for the Eurozone will fall back to the ECB's target level of 2%, the slowest price pressure growth since October 2024. In March, inflation data rose by 2.2% year-on-year. Eurozone GDP growth is expected to maintain a stable growth rate of 0.2% quarter-on-quarter in the first quarter. Moderate inflation growth will enhance traders' confidence in the ECB's potential rate cut at the June policy meeting.
At the same time, Refinitiv recently reported that ECB policymakers are increasingly confident about a rate cut in June as inflation continues to decline. However, there is little to no interest in a significant rate cut.
ECB policymakers, including Dutch Central Bank President Klaas Knot, recently stated that the monetary policy for June will be more "complex" as long-term inflation risk is "bi-directional". Knot warned that US tariff policies could lead to a recent decline in demand and deflation, stating, "In the short term, it is 100% clear that demand shocks will dominate, so inflation will decline."
European Central Bank policymaker François Villeroy de Galhau stated on Monday that there is still room for interest rate cuts.
Technical Analysis from Analysts:
From the daily chart, the euro against the dollar is currently at a key price Range. After experiencing a strong rise from a low of 1.0177 to a high of 1.1572, the exchange rate is currently consolidating around 1.1350. The price has formed a compact consolidation Range, indicating that the market is digesting the previous upward momentum, while also reflecting traders' cautious attitude towards recent economic and political events.
From the perspective of moving averages, the exchange rate is currently above the 55-day moving average (1.0863) and the 14-day moving average (1.1329), indicating that both medium-term and short-term trends remain upward. The price's close adherence to the 14-day moving average suggests a potential directional breakthrough in the short term.
The MACD Indicators show that DIFF (0.0150) is nearly flat with the DEA (0.0156) line, with a MACD value of -0.0013, near the zero axis, indicating that the current momentum is relatively neutral and the market may soon welcome a new directional move.
The RSI Indicator reading is 61.0019, in the neutral to strong region, but has not yet reached overbought levels (typically above 70), indicating that there is still upward room in the short term. The ATR indicator shows that the current volatility remains at a relatively low level, further corroborating the judgment that the market is in a consolidation phase.
In terms of patterns, the price has recently formed a potential Resistance area near 1.1270, and if it can hold this level, the exchange rate may attempt to break upwards through the 1.1410 Resistance level. Below, besides 1.1270, there is also a strong support level at 1.1020, which aligns with previous consolidation highs.
Market sentiment observation
Current market sentiment is cautiously waiting. On one hand, the dollar maintains resilience under expectations of easing trade relations; on the other hand, the euro is under pressure due to expectations of possible interest rate cuts from the European Central Bank. Market participants are currently in a dilemma: economic data shows that inflation in the Eurozone may decline to target levels, which strengthens expectations for another rate cut by the European Central Bank in June, while the US economy remains relatively strong, supporting the dollar.
The Fear and Greed Index shows that market sentiment is in a neutral and cautious state, with a balance of bullish and bearish forces. Especially before the release of key economic data, most traders prefer to remain on the sidelines, waiting for clearer directional signals to emerge.
Market Outlook
Bullish outlook: If the euro can effectively break through the 1.1410 Resistance level, it is likely to continue the upward trend, targeting the psychological level of 1.1500, and even challenge the previous high of 1.1572. Factors supporting this view include a significant easing of global trade tensions, Eurozone economic data exceeding expectations, and weak US economic data. Technically, if the RSI continues to stay above 60 but not exceed 70, it will provide good momentum support for bulls.
Bearish outlook: If the exchange rate falls below the 1.1270 Support level, it may trigger a technical correction, targeting the upper edge of the previous consolidation range near 1.1020. Possible factors driving this trend include strong US economic data, Eurozone inflation data below expectations leading to more aggressive rate cut expectations, and escalating uncertainty in trade negotiations. From a technical perspective, if the MACD Indicators form a death cross and fall below the zero line, it will further confirm bearish signals.
Note: The fundamental content of this article is based on reports from Refinitiv.
