It is moving gently downwards and has touched 1.1840. Investors are preparing for the release of key U.S. statistics that could affect expectations about future Federal Reserve policy.
The focus is on the minutes of the latest Federal Reserve meeting, a preliminary estimate of GDP and the PCE core inflation index. The latter is a key political indicator for the regulator.
The dollar came under pressure last week following weaker inflation data, which raised expectations of rate easing in the second half of the year. However, a strong labor market report – showing the strongest job growth in more than a year and an unexpected decline in unemployment – signaled the economy's resilience.
The market is now pricing in the first rate cut in June. Overall, around 62 basis points of easing are expected by 2026, corresponding to two reductions of 25 basis points and approximately a 50% probability of a third step.
Technical analysis
On the H4 timeframe, EURUSD is consolidating after pulling back from January highs. The range has widened, but the price is gradually moving towards its lower boundary.
The key level is at 1.1835, intermediate support within the broader range of 1.1765-1.2000. If it holds, the sideways movement is likely to persist with upward correction attempts.
A break below 1.1835 would open the way towards 1.1765. A return above 1.1890-1.1900 would relieve bearish pressure and return the pair to the middle of the range.
Short-term bearish pressure persists on the H1 chart for EURUSD. The price is constantly forming lower highs and lower lows, trading near the bottom of the Bollinger Bands. The midline acts as dynamic resistance.
The stochastic oscillator is in the oversold zone, allowing for local rebounds, but the MACD remains in negative territory: the momentum is still on the sellers' side. The nearest support is at 1.1835. Reaching a level below that level would intensify the fall towards 1.1810-1.1800. Resistance lies between 1.1860 and 1.1870.
Conclusion
In summary, EURUSD remains under constant selling pressure as markets await US fundamental data that will shape expectations from the Federal Reserve. The pair is testing the critical support at 1.1835, and technical indicators confirm bearish momentum despite oversold conditions.
The fundamental picture is mixed: Weaker inflation points to eventual Fed easing, but strong jobs data complicates the timeline. The near-term direction depends entirely on today's releases. A break below 1.1835 would likely accelerate losses towards 1.1765, while a bounce above 1.1890-1.1900 could indicate a temporary respite. Until then, the path of least resistance remains lower.
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.
