EUR/USD is trading around 1.1730 to 1.1750 early Monday, May 4, 2026, staying near the top of its recent range after a period of consolidation. The main factor driving the pair is the ongoing policy gap between the ECB and the Fed, especially with recent energy shocks and stubborn inflation.
Current Setup & Divergence Theme
The spot rate is around 1.1730, staying within the April and May range of 1.1570 to 1.1850. ECB officials are hinting at possible rate hikes of up to 75 basis points because of higher oil prices and Eurozone inflation close to 3%. Lagarde has said June action is possible. In contrast, the Fed is holding a neutral to slightly dovish stance after Powell’s comments, leaving room for one or two rate cuts. This smaller rate gap, now about 160 basis points, supports the euro, and most forecasts for 2026 are between 1.20 and 1.25.
Technical Outlook & Key Levels
- Resistance is at 1.1750 to 1.1780 right now, with the next level at 1.1850, which was the April high. If the price breaks above these, the next targets are 1.1917 to 1.2000.
- Support: 1.1650–1.1680 (pivot + 50-day EMA), then 1.1570–1.1600. Breakdown below 1.1The bullish channel that started from the March lows is still in place, and the RSI is neutral, sitting around 52 to 56.I neutral (~52–56).
Monday & Week-Ahead Outlook (May 5–9)
U.S. data, including ISM services and employment numbers, along with comments from ECB officials, will likely cause market swings. Risk sentiment and oil prices will also play a role.
Bullish scenario (base case, about 55 to 60% chance): If 1.1650 holds and the ECB stays hawkish, the pair could rise to 1.1850 or even 1.20.
Bearish scenario: If the price is rejected at 1.1750 and U.S. data is strong, the pair could fall back to test 1.1570 to 1.1650.
Bottom line: The policy gap between the ECB and Fed gives the euro a long-term boost, supporting a move toward 1.20 to 1.24 over the medium term. In the short term, things are more tactical because of geopolitics and low liquidity. Keep an eye on 1.1650 support and 1.1750 resistance this week. If the policy gap continues, the longer-term outlook for euro bulls remains positive.
