The EUR/USD pair has entered a consolidation phase, hovering around the 1.1500 level on Tuesday. Although the currency pair recently experienced a surge of over 1%, reaching its highest level since 2021 at approximately 1.1570, the current technical analysis indicates that while the bullish sentiment persists, momentum appears to be diminishing.
At the start of the week, the US Dollar faced considerable selling pressure amid concerns regarding the Federal Reserve’s independence. The USD Index fell to a three-year low, losing nearly 1% on Monday. These developments were influenced by remarks from White House economic strategist Kevin Hassett, who suggested that discussions about terminating Fed Chairman Jerome Powell were ongoing. Following this, President Trump openly criticized the Fed’s monetary policy decisions, asserting that the US is experiencing “virtually no inflation” and emphasizing the need for interest rate cuts to avert economic slowdown. Trump also accused Powell of being politically motivated in his decision-making.
Looking ahead, the economic calendar lacks significant data releases, prompting investors to focus on comments from Fed officials throughout the day. If the Fed members counter Trump’s criticisms and assure the market of their political independence in policy decisions, this could potentially lead to a recovery in the USD. Conversely, if Trump reiterates his intent to dismiss Powell, market uncertainty could continue to suppress demand for the dollar.
In terms of technical indicators, the Relative Strength Index (RSI) on the 4-hour chart has retreated toward 60, signaling a continuation of the bullish outlook albeit with waning momentum. Immediate support for the EUR/USD is expected at 1.1450, followed by further levels at 1.1380 and 1.1300. On the upside, key resistance levels are anticipated at 1.1540, 1.1600, and 1.1720, marking critical levels within the established trading range.
