on Thursday it stabilized at 1.1792 after a sharp drop the previous day. The US dollar was supported by strong US macroeconomic data and unexpectedly hawkish signals from the Federal Reserve.
Minutes from the previous meeting showed that disagreements persist within the Federal Reserve over the future path of rates. This suggests that it may not be easy for the new president to implement a rate cut. Some members had previously explicitly admitted the possibility of a rate hike if inflation remains above target.
The market has slightly reduced expectations for policy easing this year, but still estimates two 25 basis point cuts before the end of the year.
Additional support for the dollar was provided by industrial production data. It grew at the highest rate in almost a year. Orders for core capital goods exceeded forecasts and the number of new home mortgages hit a five-month high.
PMI and GDP data will be released next, which may provide additional guidance on the path of interest rates.
Technical analysis
On the H4 chart, EUR/USD is holding near 1.1790-1.1800 after breaking the support at 1.1885 and accelerating the decline. The price has firmed below the middle line of the Bollinger Bands; The bands have widened, indicating bearish momentum. The MACD is in negative territory; The histogram is deepening further, reinforcing the bearish momentum. The stochastic oscillator recovered from oversold. In this context, a short correction is possible, but the structure remains weak. The nearest support is at 1.1765 and resistance at 1.1885.
In the lower time frame of the first half, a strong downward movement is visible, followed by local stabilization. The price is forming a small bounce from 1.1780, but remains below the middle line of the Bollinger Bands. The MACD remains negative, although the pressure is gradually decreasing. The stochastic oscillator is in the overbought zone, suggesting that any corrective bounce could fade in the 1.1820-1.1840 zone.
The overall picture points to a short-term rally within a broader bearish movement.
Conclusion
In summary, EUR/USD remains under decisive pressure following hawkish signals from the Fed and resilient US economic data. The technical break below key support has confirmed a bearish reversal, and momentum indicators favor further decline despite oversold conditions. The current stabilization looks corrective rather than reversal, and any rebound will likely be limited near 1.1820-1.1840. The upcoming US PMI and GDP releases will set the near-term direction. A break below 1.1765 would open the door to deeper losses towards 1.1700, while a sustained move above 1.1885 is needed to relieve bearish pressure.
By RoboForex Analysis Department
Disclaimer
Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
