The EURUSD pair has exhibited significant volatility in recent days, falling to $1.10837 before recovering to $1.1184. Agreements between the US and China to temporarily reduce mutual tariffs for 90 days provided significant support for the dollar, leading to a decline in the single European currency. However, this bullish momentum for the USD proved short-lived.
The market situation shifted after the publication of US Consumer Price Index (CPI) data, which came in below analysts' expectations and amounted to 2.3%. This result increased pressure on the dollar, as weak inflation figures raise the likelihood of an earlier interest rate cut by the Fed. A much lower oil price, the driver of the EURUSD rally, will also contribute to this scenario.
The euro faces additional pressure from weak eurozone economic data, although improving sentiment in Germany, the region's key economy, adds some confidence. Problems in the German industrial sector and slowing growth in consumer spending remain serious risks to the single currency's future movement. Meanwhile, uncertainty surrounding European Central Bank policy continues to add volatility. However, despite recent price swings, speculative interest in the euro remains strong.
EU economic growth data is expected to be released this week. Better-than-expected results could support the euro and reignite its rally.
The technical picture for the EURUSD pair suggests a corrective rebound following its fall on May 12. On the daily chart, the pair is trading above both EMA(50) and EMA(200), despite recent volatility. The Relative Strength Index (RSI) has rebounded to around 42, suggesting a potential recovery in the currency pair's upward momentum.
Current recommendation:
Buy at the current price. Take-profit could be set at 1.13700. Set a stop loss at 1.10500.
This content is for informational purposes only and is not intended to be investing advice.
