EURUSD Attempts to Rebound from 5-Month Low

The Eurozone inflation report for March offered some relief to EURUSD bulls, with figures dipping slightly. This, coupled with receding Middle Eastern tensions, has fueled a modest Euro rebound. However, the outlook remains clouded by conflicting central bank stances. 

However, the upside for the Euro remains limited. The ECB continues to express a dovish bias compared to the Federal Reserve. While ECB policymakers like François Villeroy de Galhau advocate for a rate cut as soon as June, recent comments from Madis Muller and Robert Holzmann suggest a more cautious approach, highlighting potential economic risks and geopolitical tensions as deterrents. 

Across the Atlantic, hawkish rhetoric from Fed officials like Austan Goolsbee and Raphael Bostic continues to support the USD. They suggest that the Fed’s current restrictive policy is appropriate and that future rate cuts are unlikely before the end of the year. This divergence in central bank policy expectations could keep the Euro under pressure. 

Technical Analysis 

The 4-hour shows that the EURUSD is currently trading slightly higher at 1.06610, having recently broken above the 20-SMA (green line) but remains below the downward-sloping 50-SMA (blue line) and 100-SMA (orange line). This indicates a potential short-term bounce but suggests a prevailing downtrend. The Relative Strength Index (RSI) sits at 50.60, hovering around the midline, signifying neutral momentum. 

With the RSI (50.60) firmly trading flat at the 50.00 level, the Euro weakness would likely offer short-term trading opportunities towards the 1.05998 support level in the near term. A successful break below the 1.05998 level would likely bring the major support level of 1.05166 into play in the short term. 

However, sustained buying pressure and a push above the 50-SMA could leave the 1.07236 resistance level as the initial level of interest in the near term. A break above the initial resistance level, with significant volume, could confirm the bullish momentum, likely bringing the 1.08001 and 1.08829 resistance levels into play. 


The EURUSD faces conflicting forces. Short-term relief from the Eurozone inflation report and easing Middle East tensions might be countered by the ECB’s cautious approach and the Fed’s hawkish stance. Technically, a break below 1.05998 indicates further Euro weakness, while a surge above 1.07236 would suggest a potential trend reversal. 

Sources: TradingView, Trading Economics, MT Newswire, EUROSTAT, Reuters. 

Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

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