- The EUR/USD price analysis turns bearish despite a dovish Fed.
- Focus remains on the EU summit and ECB speeches.
- Technical indicators have started turning south.
The EUR/USD price analysis suggests limited upside potential despite solid support found after the Fed’s decision. The pair struggles to hold above 1.0900 as ECB speeches and the EU summit pose uncertainty. If ECB officials turn dovish, the EUR/USD could face fresh downside pressure. On the other hand, a hawkish title could fuel the recent rally.
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The Federal Reserve left its policy rate at 4.25–4.50% in its March meeting. However, it declared a slower QT pace, lowering the UST roll-offs to $5 billion from $25 billion. The decision had been discussed in January, anticipating an increase in debt ceiling and further absorption of Treasury liquidity by June.
The Fed’s updated forecast shows a risk of stagflation as GDP growth revised from 2.1% to 1.7% for 2024 and no expansion is expected beyond 2025. Inflation projections also increased to 2.7% amid import tariffs. However, Powell called these “transitory.” Despite a greater uncertainty around GDP and employment, the central bank maintained a median forecast of two rate cuts in 2025 and 2026 and one in 2027.
The US Treasuries surged along with Nasdaq while the dollar slipped from the intraday highs. Eurozone bond yields declined as markets digested the Fed’s dovish tilt. Germany’s 10-year bond yields fell 3 bps to 2.77%, around 2-week lows. The 2-year yields, more sensitive to the ECB, fell 2 bps to 2.16%. Traders now expect an ECB deposit rate of 2.02% by December with a 50% probability of a rate cut in April.
EUR/USD Technical Price Analysis: Bears Fighting to Take Over 1.0825
The technical picture for EUR/USD seems like turning in favor of bears. The pair has turned back below the 30-period SMA on the 4-hour chart. The RSI is also below the 50.0 mark, showing the potential for a deeper correction.
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The immediate support for the pair emerges at 1.0825. Sustained breakout of the level may change the bullish bias. The price can further dip towards 1.0720. On the flip side, 1.0950 emerges as a tough nut to crack. If bulls manage to break the resistance, the next key level emerges at 1.1000. However, the path of least resistance lies to the downside.
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