The euro held firm against the U.S. dollar on Monday, with the EUR/USD pair trading above 1.1300 during European market hours. The resilience of the euro comes amid a broadly weaker greenback, pressured by concerns over U.S. trade policy and softer-than-expected macroeconomic data ahead of the Federal Reserve’s next policy decision.
As investors recalibrate expectations for the Fed’s monetary stance, pre-positioning ahead of the U.S. ISM Services PMI release added further weight to the dollar.
At the same time, recent upbeat data from the eurozone helped support the euro’s gains, pushing the pair away from recent lows.
Technically, EUR/USD remains in bullish territory. The pair has consistently traded above all its major moving averages, with the 20-day Simple Moving Average offering dynamic support around 1.1300. Despite some fading momentum, the Relative Strength Index (RSI) hovers near overbought levels, suggesting limited downside in the near term.
EU Data Surprises to the Upside
The eurozone economy showed modest resilience in the first quarter, offering a tailwind for EUR/USD. Fresh data painted a cautiously optimistic picture:
- EU Q1 GDP rose 1.2% YoY (vs. 1.0% expected) and 0.4% QoQ (vs. 0.2% expected)
- April HICP inflation increased 2.2% YoY, slightly above estimates
- Germany’s GDP grew 0.2% QoQ, matching forecasts
- German retail sales fell 0.2% in March, better than the -0.4% projected
These figures contrast with recent dovish commentary from ECB policymakers, who continue to signal the possibility of a 25 basis point rate cut in June. ECB’s Olli Rehn even suggested deeper cuts may be warranted if downside risks persist.
While eurozone inflation remains above target, the ECB appears willing to ease further in support of flagging growth.
Dollar Weakens on U.S. Economic Slowdown
Recent U.S. data has painted a more fragile picture of the world’s largest economy. Q1 GDP contracted 0.3% annually, missing expectations for growth. Consumer confidence dropped to 86 in April—its lowest level since 2021—while labor market figures showed mixed results:
- ADP Employment: +62K (vs. 108K expected)
- Job Openings (JOLTS): 7.19 million (below expectations)
- Initial Jobless Claims: 241K (vs. 224K expected)
- Nonfarm Payrolls (NFP): +177K, exceeding the 130K forecast
- Unemployment Rate: Held at 4.2%
The Fed is expected to hold rates steady in its upcoming meeting, with Chair Jerome Powell likely emphasizing caution amid economic uncertainty. Trade tensions remain a wildcard, though recent comments from President Trump suggest ongoing negotiations with key partners, including China, Japan, and India.
Key EUR/USD Levels to Watch:
- Resistance: 1.1400, 1.1470, 1.1573
- Support: 1.1300, 1.1260, 1.1170
As global markets await further clarity from the Fed and trade headlines, EUR/USD is poised to react to any shifts in rate expectations or geopolitical tone.
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