Bullish Trend Could Resume If Buyers Defend Support

Summary:

If bulls begin to step in at this level, it could mark the start of a renewed upward move, aligning with the prevailing bullish trend.

Buy EURUSD

End Time

CLOSED

1.12999

ENTRY

1.14280

TGT

1.11700

1.17394 +0.00011 +0.01%

659

Points

Profit

1.11700

1.13658

CLOSING

1.12999

ENTRY

1.14280

TGT

The European Central Bank (ECB) is widely expected to cut interest rates by 25 basis points on Thursday, as recession concerns—partly fueled by ongoing U.S. tariff measures—continue to weigh on the eurozone outlook. Hadrien Camatte, Senior Economist at Natixis, suggested that the ECB could lower all three of its key interest rates during April's policy meeting.

The central bank had already lowered rates for a second consecutive time in March, bringing the deposit rate down to 2.5%. A further cut would push it to 2.25%.

Meanwhile, in the U.S., the latest Empire State Manufacturing Index showed notable improvement, climbing by 11.9 points in April to -8.1, up from March’s reading of -20. This was the best figure in two months and surpassed expectations, which had projected a smaller recovery to -14.5.

Despite the improvement, business activity in New York State remained in contraction territory. Survey participants reported slight declines in both new orders and shipments. Delivery times stayed largely unchanged, while supply availability deteriorated further. Inventory levels, however, continued to rise.

“Following a sharp drop last month, activity contracted only slightly in April,” noted Richard Deitz, Economic Research Advisor at the Federal Reserve Bank of New York. “Prices paid and received rose at the fastest pace in over two years. For the first time since 2022, firms expressed clear pessimism about future conditions.”

Elsewhere, U.S. Treasury Secretary Scott Bessent downplayed fears of a financial emergency, reassuring markets that the U.S. economy remains on stable ground. He emphasized that concerns over an imminent crisis were largely unfounded and reaffirmed the administration’s commitment to “fair” trade negotiations. These discussions, according to the Trump administration, are necessary steps to help balance the federal budget.

Federal Reserve officials also delivered a more cautious message. Atlanta Fed President Raphael Bostic stated that the central bank is still some distance from achieving its 2% inflation target. His remarks cooled recent speculation around early rate cuts, pointing instead to persistent inflationary pressures that continue to complicate the Fed's policy outlook.

Similarly, St. Louis Fed President Alberto Musalem warned that inflation could reaccelerate even as the labor market shows signs of weakening. He emphasized the need for a data-driven approach and highlighted the risks of inflation rising independently of employment trends. Musalem also noted that anchoring long-term inflation expectations is essential, especially in the face of uncertain fiscal and trade dynamics.

“There’s substantial uncertainty regarding the timing and cumulative impact of shifting trade, immigration, and regulatory policies,” Musalem stated during a speech in Hot Springs, Arkansas. “We have to remain open to the possibility that inflation could pick up even if labor conditions continue to deteriorate.” Bullish Trend Could Resume If Buyers Defend Support_1

Bullish Trend Could Resume If Buyers Defend Support_1

Technical Analysis

EURUSD has pulled back toward key support at 1.1273, hovering just above the 100-period moving average on the 1-hour chart, currently around 1.1265. If this support zone holds, it could provide a platform for buyers to re-enter the market and potentially drive the pair higher toward local resistance near 1.1428. A breakout above that level could confirm a continuation of the broader bullish trend, especially if a new local high is formed.

From a momentum standpoint, the Relative Strength Index (RSI) recently dipped to 33, edging closer to oversold territory. This suggests that bearish momentum may be fading, and a reversal could be in sight. If bulls begin to step in at this level, it could mark the start of a renewed upward move, aligning with the prevailing bullish trend.

However, if the support fails and the pair breaks lower, the 200-period moving average could come into focus as the next downside target.

Trading Recommendations

Trading direction: Buy

Entry price: 1.1293

Target price: 1.1428

Stop loss: 1.1170

Validity: Apr 23, 2025 15:00:00

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