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13.05.2025 11:08 AM
EUR/USD. Analysis and Forecast

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Today, the EUR/USD pair is showing signs of recovery but continues to face challenges as the U.S. dollar strengthens amid progress in trade negotiations between the United States and China. Over the weekend, the U.S. and China reached a preliminary agreement in Switzerland to significantly reduce tariffs, signaling a potential de-escalation in trade tensions. Under the agreement, the U.S. will lower tariffs on Chinese goods from 145% to 30%, while China will cut tariffs on U.S. imports from 125% to 10%. Markets welcomed this development as a positive step toward stabilizing global trade relations.

For better trading opportunities today, attention should turn to the upcoming release of the U.S. Consumer Price Index (CPI) report for April, which is scheduled during the North American session. Economists expect monthly inflation to rise to 0.3%, up from -0.1% previously, while core CPI is also forecast to increase to 0.3% from 0.1%. On an annual basis, both measures are expected to remain unchanged.

As for the euro, the single currency remains under pressure due to growing expectations that the European Central Bank (ECB) will extend its monetary policy easing cycle in response to declining inflation. Recently, several ECB officials have hinted at further rate cuts, citing ongoing trade uncertainty and a persistent disinflationary trend.

However, last Friday in Stanford, ECB Executive Board member Isabel Schnabel offered a more cautious outlook in her remarks, suggesting that current rates are appropriate and should remain in neutral territory. She also warned of medium-term inflation risks, which could threaten the ECB's 2% target due to continued global economic disruptions.

As a result, the trajectory of EUR/USD will largely depend on the outcome of trade negotiations, upcoming U.S. inflation data, and ECB policy signals. Traders are advised to closely monitor these developments for informed decision-making.

Technical Outlook:

If the pair manages to hold above the key 1.1100 level, the next resistance toward the round level of 1.1200 lies near 1.11525. However, as the Relative Strength Index (RSI) on the daily chart remains in negative territory, a return to 1.1200 looks doubtful. Moreover, oscillators on the hourly and 4-hour charts also remain bearish.

Irina Yanina,
Analytical expert of InstaForex
© 2007-2025
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