EUR/USD remained stable at 1.1803 on Tuesday following a significant decline over the past two days. Robust US macroeconomic indicators and the Federal Reserve’s updated outlook on monetary policy provided significant support. Recent data indicated an unforeseen growth in US industrial activity, implying that both the economy and corporate earnings continue to demonstrate strength. Investor focus is turning towards the upcoming report on the US labor market scheduled for Friday; however, its release could face delays stemming from a partial government shutdown.
The dollar experienced an upward trend on Friday following the nomination of Kevin Warsh by US President Donald Trump to lead the Federal Reserve, succeeding Jerome Powell. The market views Warsh as a candidate with a more hawkish stance. He accommodates rate reductions, albeit at a more measured tempo compared to other contenders. In a separate development, Trump revealed a trade agreement with India that includes mutual tariff reductions in return for New Delhi ceasing its purchases of Russian oil.
On the H4 chart, EUR/USD has entered a corrective phase following a surge, having encountered resistance in the 1.2050-1.2100 range. The price has retraced to the range of 1.1850-1.1870. The asset continues to maintain its position above the previously breached resistance level of 1.1830-1.1850, which now serves as a crucial support zone. Momentum shows signs of weakening: Bollinger Bands have ceased to widen, the MACD stays in positive territory, yet the histogram is contracting. The current correction appears to be purely technical; indications of a trend reversal have not yet emerged. The correction on the H1 timeframe is taking shape within a descending channel. The price remains beneath the midpoint of the Bollinger Bands, indicating a slow recovery trend. The Stochastic oscillator has moved out of the oversold territory, indicating a potential for a short-term recovery. Nevertheless, as long as prices stay beneath the 1.1920-1.1950 range, the downward pressure continues to be evident. Maintaining the 1.1830 level is essential for sustaining the bullish outlook on longer timeframes.
In conclusion, the EUR/USD pair is experiencing a technical halt following a notable drop, currently locating temporary support around 1.1803. The stabilization is primarily influenced by a reassessment of Federal Reserve expectations after a hawkish leadership appointment and strong US industrial performance. Although technical indicators imply that the present movement is a correction within a broader uptrend, the short-term perspective continues to be prudent. The pair’s immediate trajectory is significantly dependent on maintaining the essential 1.1830 support level. The forthcoming US labor market data is expected to play a pivotal role, even with possible delays, acting as the next significant driver for the dollar and the pair.