The EUR/USD exchange rate has shown signs of weakness, trading around 1.1365 early in the European session on Thursday, reflecting a decline of 0.28% for the day. The pair has managed to maintain a positive trend above the 100-day Exponential Moving Average (EMA), yet the overbought condition indicated by the Relative Strength Index (RSI) suggests that potential upward movement may be limited. Immediate resistance is observed at 1.1455, with an initial support target established at 1.1264.
As the European Central Bank (ECB) prepares to announce its interest rate decision later today, traders are opting for a cautious approach, preferring to stay on the sidelines. Expectations are firmly set on a likely reduction of the key interest rate by 25 basis points during this meeting, which would mark the sixth consecutive cut amidst ongoing global trade tensions and economic uncertainty.
Markets are also looking forward to scrutinizing comments from ECB President Christine Lagarde for insights into future interest rate direction. This guidance is expected to significantly influence the EURO ’s performance and impact the performance of the EUR/USD pair.
The outlook for EUR/USD remains generally positive, as it consistently trades above the critical 100-day EMA. However, the RSI nearing the 71.50 mark indicates that the pair is overbought, which could lead to a period of consolidation before any significant appreciation occurs.
For those monitoring the pair’s movements, the upper Bollinger Band at 1.1455 serves as the immediate resistance. A successful breakout above this threshold could propel the exchange rate towards the January 2022 high of 1.1481. Further upward movement may encounter additional resistance at 1.1608, corresponding to the high seen in November 2021.
On the downside, the primary support stands at 1.1264, having hit the lows recorded in mid-April. Should the EUR/USD fall below this level, it may trigger further selling pressure towards the psychological mark of 1.1100, with even lower targets set at 1.0780, reflecting the lows achieved earlier in April.
