The EUR/USD price analysis shows a growing economic and monetary policy divergence between the US and the Eurozone.
Market participants are pricing a 92.1% chance of a September rate cut.
Traders are paying attention to the conflict between Trump and Powell.
The EUR/USD price analysis shows a growing economic and monetary policy divergence between the US and the Eurozone. Employment figures on Friday revealed that the US economy has slowed down significantly amid higher tariffs. Meanwhile, a trade deal between the US and the EU has lifted the prospects of the Eurozone economy.
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After Friday’s downbeat report, market participants are pricing a 92.1% chance that the Fed will cut rates in September. Meanwhile, Goldman Sachs predicts three rate cuts before the end of the year. Such an outcome might weigh on the dollar.
On the other hand, the European Central Bank has paused its easing cycle after nearly accomplishing its inflation targets. This means fewer rate cuts in future. At the same time, a trade deal last week between the US and the EU means the Eurozone economy can keep recovering.
This growing divergence might put pressure on the dollar and allow the euro to climb.
Meanwhile, traders are also paying attention to the conflict between Trump and Powell. An unexpected governor’s resignation has created a gap that could allow Trump to make changes.
EUR/USD key events today
EUR/USD technical price analysis: Bulls pause for a pullback after SMA break
EUR/USD 4-hour chart
On the technical side, the EUR/USD price is pulling back after a recent rally past the 30-SMA resistance. However, the price remains above the SMA, with the RSI above 50, suggesting a bullish bias. Therefore, the pullback might only be brief.
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Bulls took charge when the previous decline paused at the 1.1400 key support level. Here, the price made a solid bullish candle that sent EUR/USD above the 30-SMA. However, the rally paused when it got near the 1.1600 key resistance level. As a result, the price pulled back.
If bulls are still stronger, the retreat will pause at the 30-SMA, allowing EUR/USD to retest the 1.1600 resistance level. A break above this level will clear the path to the 1.1750 resistance level. On the other hand, if bearish momentum returns, the price will break below the SMA to retest the 1.1400 support.
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