The EUR/USD pair has experienced a pullback recently, declining from last month’s peak of 1.1855 to the present level of 1.1720. This retreat occurred following the latest interest rate decisions made by the Federal Reserve and the European Central Bank. The EUR/USD pair experienced a decline following the interest rate decisions announced by the Federal Reserve and the European Central Bank last week. In his concluding meeting, Jerome Powell asserted that the economy was encountering significant obstacles as the conflict persisted.
He suggested that the bank had reservations regarding economic growth amid the ongoing conflict. Simultaneously, he suggested that the bank might reduce interest rates later this year should the weakness persist. The European Central Bank has maintained its current interest rates. However, the Christine Lagarde bank suggested that it could raise interest rates in the June meeting. Should this occur, the bank could increase rates from the existing 2.0% to 2.25%. Expectations are set for the headline consumer price index to increase to 3.0% in April, driven by the ongoing rise in energy prices. Consequently, indications suggest that the Fed and the ECB may experience a divergence.
The EUR/USD pair is poised to respond to the forthcoming macroeconomic data from both Europe and the United States. On Tuesday, the US is set to release the forthcoming JOLTs job openings, new home sales, and ISM services PMI data. The upcoming release of non-farm payrolls data on Friday will provide critical insights for the Federal Reserve as it assesses its next interest rate decision. The daily timeframe chart indicates that the EUR/USD pair has experienced a rebound from a low of 1.1412 on March 13, currently standing at 1.1720. It has consistently stayed above the 50-day and 50-day Exponential Moving Averages.
The pair has established a bullish flag pattern, characterized by a vertical line and a descending channel. This pattern indicates potential for further gains in the short term. The pair continues to trade above the Supertrend indicator, indicating that bullish sentiment prevails. Consequently, the pair is expected to recover, possibly reaching the April peak of 1.1855. A breakthrough past that level suggests further upward momentum, possibly reaching 1.200.