EUR Overview

USD Performance: The US dollar strengthened due to safe haven demand amid the US-Iran conflict and a realization that rate cuts may be delayed, with inflation pressures rising from higher oil prices and strong ISM Manufacturing PMI data.

EUR Outlook: The Eurozone is experiencing increased inflation expectations due to rising energy prices, leading to a 21% chance of a rate hike in June and 50% by year-end, despite ECB caution against hasty reactions to geopolitical events.

EURUSD Technical Analysis: The EURUSD is nearing a key swing level at 1.1575, where buyers may enter, while sellers are looking for a break to push prices down to the 1.14 level; bearish momentum is defined by a downward trendline on shorter timeframes.

Upcoming Economic Data: Key US economic reports, including ADP, ISM Services PMI, Jobless Claims, and NFP, are scheduled for release this week, although their impact may be overshadowed by the ongoing US-Iran conflict.

Economic Data Releases: This week features key economic data releases including manufacturing PMI, CPI estimates, GDP figures, and employment statistics from the Eurozone, U.K., Australia, and the U.S., with expectations of modest growth and inflation pressures.

Inflation and Monetary Policy: Analysts predict a softening of eurozone inflation, with the ECB likely to maintain current rates, while the RBA may consider a rate hike in May if inflation remains persistent despite expected GDP growth.

U.S. Labor Market Outlook: The U.S. labor market is expected to show modest job growth with a stable unemployment rate, although hiring demand is cooling, and retail sales are projected to decline due to adverse weather and lower auto sales.

Consumer Spending Trends: Despite anticipated declines in retail sales, underlying consumer demand remains strong, supported by tax refunds and a stabilizing labor market, which may bolster discretionary spending in the near future.

USD Overview: The US dollar is experiencing volatility due to uncertainty surrounding tariffs after the Supreme Court ruling, with traders awaiting new catalysts. Risks include potential US-Iran military escalation and stronger US economic data impacting the dollar's value.

EUR Overview: The Euro remains stable as the ECB maintains interest rates and a data-dependent approach, focusing on inflation. Recent economic data shows positive trends, with core inflation slightly above the 2% target.

EURUSD Technical Analysis - Daily: The EURUSD is consolidating around the 1.18 level, with sellers looking for opportunities around 1.1927 for a potential drop, while buyers seek a breakout above this level for a rally.

Upcoming Catalysts: Key upcoming events include the third round of US-Iran nuclear talks, US Jobless Claims figures, German CPI, and US PPI data, which may influence market movements.

USD Performance: The US Dollar weakened after the Supreme Court's decision to strike down Trump's tariffs, although new tariffs under a different law remain in place, potentially reducing the average tariff rate. The dollar may face continued pressure amid uncertainty, with risks from US-Iran tensions and stronger US economic data.

EUR Stability: The Euro remains stable as the European Central Bank (ECB) held interest rates steady and maintained a cautious approach towards inflation, focusing on long-term targets rather than short-term fluctuations.

EURUSD Technical Analysis: The EURUSD currency pair hit a new monthly low but rebounded after the Supreme Court ruling. The price has broken above a downward trendline and is retesting support around the 1.1805 level, with potential for a rally towards 1.1927 or a drop towards 1.17.

Upcoming Economic Data: Key economic indicators are on the horizon, including US ADP jobs data, Jobless Claims figures, German CPI, and US PPI data, alongside ongoing monitoring of US-Iran developments.

USD Movement: The USD is experiencing a decline in early Asian trading due to thin liquidity, exacerbated by the closure of Japanese markets for a holiday, while China resumes trading after its Spring break.

Supreme Court Ruling: The Supreme Court has struck down significant portions of President Trump's tariff regime, ruling that the administration exceeded its authority in imposing broad tariffs without congressional approval, creating uncertainty for businesses.

Impact on Trade Policy: The ruling does not eliminate the president's ability to impose tariffs but limits the use of emergency justifications, reinforcing constitutional constraints on executive trade powers and potentially affecting future administrations.

Market Reactions: In response to the ruling, Trump announced a new 15% tariff framework, aiming to maintain pressure on trading partners while navigating legal challenges, highlighting ongoing volatility in trade policy and its implications for businesses and consumers.

Market Analysts' Views on EUR/USD: Analysts suggest that the EUR/USD currency pair is currently in a comfortable range for the ECB, particularly between 1.16 and 1.18, with potential complications if it approaches 1.20.

Goldman Sachs' Outlook: Goldman Sachs forecasts further upside for EUR/USD, expecting it to benefit from ongoing trends in FX markets, particularly in the context of broad dollar depreciation.

Morgan Stanley's Perspective: Morgan Stanley agrees that risks for EUR/USD are skewed to the upside, but advises caution, suggesting that a pullback below 1.1750 would present a more attractive entry point for long positions.

De-dollarisation Narrative: Both firms highlight the ongoing de-dollarisation narrative as a significant factor influencing the EUR/USD dynamics, particularly in the first half of the year.