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In the competition between bulls and bears, can the easing of trade relations limit the pullback?
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Platform]: Euro/USD in the www.xmh100.competition between long and short, can the easing of trade relations limit the callback?" Hope it will be helpful to you! The original content is as follows:
On Friday (April 25), the euro/dollar trading range narrowed, and the exchange rate fell to around 1.1350 during the European trading period. Although the euro remains strong against most major currencies, the rebound momentum of the U.S. dollar index puts pressure on the euro/dollar downward. The expectation of improvement in global trade relations has become a key factor affecting the market trend of the day.
State Analysis
The US dollar index recovered upward action on Friday, rebounding from the 99.20 low on the previous trading day to around 99.65.
In terms of the Federal Reserve's monetary policy, many policy makers warned that the excessive uncertainty brought about by US President Trump's new economic policy may harm the economy. Minneapolis Fed Chairman Neil Kashkari warned Thursday that uncertainty in the president's policy could lead to "business layoffs." Kashkari ruled out the possibility that businesses have started to cut their labor, but warned some that they were "preparing for possible layoffs when uncertainty persisted."
For the euro, despite the increase in the ECB's easing expectations, the euro remains strong. On Thursday, ECB policymaker and Finnish central bank governor Oli Renn warned of downside risks in inflation, saying that "in the current environment, medium-term inflation forecasts are likely to be below the 2% target." Rennes confidently said the current situation "provides a reason for a rate cut in June".
European Central Bank official and Austrian central bank governor Robert Holtzman also expressed concerns about structural weakness in Europe. Holtzman expects concerns about economic shocks to remain even with Trump’s announcement of lower tariffs. He said "even if the tariffs are lowered, I still see economic scars." This situation is also currencyThe relaxed policy paves the way.
Technical analysts' interpretation:
It can be seen from the daily chart that the euro/dollar is currently in the consolidation stage after experiencing a strong rise. The exchange rate has pulled back after hitting its more than three-year high of 1.1572 and has now fallen back to the 1.1350 level. The obvious 1.1260 horizontal support line can be seen in the figure, which is a key area that the exchange rate needs to be held.
The moving average line arrangement still maintains a bullish pattern, with the 55-day moving average at 1.0844, the 200-day moving average at 1.0768, and the 14-day moving average at 1.1301. The moving average system is in a golden cross state, indicating that the medium- and long-term upward trend is still intact. The upward channel structure starting from the low point 1.0177 is clear, and the current price is running in the upper middle and upper part of the channel.
MACD indicator shows that both the DIFF line and the DEA line are above the zero axis. Although there is a slight deviation, the overall value range is maintained, indicating that the kinetic energy is still biased towards bulls. The RSI indicator reads at 61.8176, which is close to the overbought area but has not reached an extreme level yet, suggesting that there is still room for upside. The average true amplitude (ATR) indicator shows that the current volatility is relatively stable and there is no severe fluctuation.
Prevention of Market Sentiment
Currently, market sentiment is in a cautiously optimistic state. On the one hand, the rebound of the US dollar index and the ECB's expectation of a higher interest rate cut put pressure on the euro; on the other hand, the strong performance of the euro on most major currencies reflects that the market has not www.xmh100.completely lost confidence in the fundamentals of the euro.
From the perspective of liquidity and volatility, there are no signs of panic selling or sharp buying, indicating that the market is in a rational state, which forms a healthy foundation for the future market.
Future Outlook
Short-term Outlook: From a technical perspective, the euro/dollar may face further downward risks, with the target pointing to the 1.1250 area. If the rebound trend of the US dollar continues, it may cause the exchange rate to fall back to test the 1.1300 mark. If it falls below this level, the next support is at 1.1260.
Medium- and long-term outlook: Despite short-term pressure, the medium- and long-term upward trend of the EUR/USD is still intact. If U.S. economic data continues to weaken, the Fed may be forced to cut interest rates by 100-125 basis points beyond the current expectations, which will put pressure on the US dollar and is expected to push the euro/dollar to return or even break through the 1.15-1.16 region. However, if trade relations easing can continue, the dollar may recover partially lost risk-haven demand, limiting the upside of the euro.
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