Markets are bracing for a pivotal week, with attention centered on Thursday's European Central Bank (ECB) rate decision and Friday's US Nonfarm Payrolls report—both key events that could influence EURUSD direction in the near term. Expectations for an ECB rate cut have intensified after euro zone inflation fell below the 2% target in May, while US labor market data will be closely scrutinized for signs of resilience amid escalating trade tensions. Despite a packed economic calendar, price action in EURUSD remains bullish, with technical indicators pointing toward continued upward momentum.
Overview
Markets are bracing for a pivotal week, with attention centered on Thursday's European Central Bank (ECB) rate decision and Friday's US Nonfarm Payrolls report—both key events that could influence EURUSD direction in the near term. Expectations for an ECB rate cut have intensified after euro zone inflation fell below the 2% target in May, while US labor market data will be closely scrutinized for signs of resilience amid escalating trade tensions. Despite a packed economic calendar, price action in EURUSD remains bullish, with technical indicators pointing toward continued upward momentum.
High Impact Economic Events
Wednesday 04:30 am (GMT+3) – Australia: GDP q/q (AUD)
Wednesday 15:15 (GMT+3) – USA: ADP Nonfarm Employment Change (USD)
Wednesday 16:45 (GMT+3) – Canada: Overnight Rate (CAD)
Wednesday 17:30 (GMT+3) – USA: ISM Services PMI (USD)
Thursday 15:15 (GMT+3) – Europe: Main Refinancing Rate (EUR)
Thursday 15:30 (GMT+3) USA: Unemployment Claims (USD)
Friday 15:30 (GMT+3) – Canada: Employment Change (CAD)
Friday 15:30 (GMT+3) – USD: Nonfarm Employment Change (USD)
Chart Analysis
EURUSD has maintained a constructive upward trajectory since establishing a low at 1.01772 on January 13, advancing over 11% to date. The pair's price structure reflects a well-defined series of higher highs and higher lows—a classic indication of sustained bullish momentum. Importantly, prices continue to trade above both the 20- and 50-period Exponential Moving Averages (EMAs), with both averages trending upward, reinforcing the strength of the prevailing trend.
Momentum indicators further validate the bullish bias. The Momentum Oscillator remains firmly above the 100 threshold, reflecting persistent upside pressure, while the Relative Strength Index (RSI) holds above the neutral 50 level, confirming continued positive sentiment.
A decisive break above the key resistance level at 1.15729 would likely clear the way for further gains, with the potential to challenge higher technical targets in the near term.
Key Resistance Levels
Should the buyers maintain market control, traders may direct their attention toward the four potential resistance levels below:
1.14542: The initial resistance level is established at 1.14542, which mirrors the daily high reached on June 3.
1.15729: The second price target is set at 1.15729, reflecting the peak marked April 20.
1.16485: The third price objective is observed at 1.16485, corresponding to the weekly resistance, R3, calculated using the standard Pivot Points methodology.
1.17559: An additional upside target is projected at 1.17559, mirroring the 261.8% Fibonacci Extension drawn from 1.14542 to 1.12098.
Key Support Levels
Should the sellers regain market control, traders may consider the four potential support levels listed below:
1.12098: The initial support level is seen at 1.12098, corresponding to the swing low formed on May 28.
1.10649: The second support level is estimated at 1.10649, representing the swing low marked May 12.
1.08144: The third support level is identified at 1.08144, reflecting the 261.8% Fibonacci Extension drawn from 1.12098 to 1.14542.
1.07326: An additional downside target is 1.07326, mirroring the daily low marked March 26.
Fundamentals
President Trump has raised tariffs on steel and aluminum imports from 25% to 50%, effective June 4, with the United Kingdom the only country exempted. The move escalates global trade tensions, prompting warnings from the OECD about a slowdown in global economic growth to its weakest pace since the pandemic. The organization urged countries to lower trade barriers to avoid further economic fallout.
The tariff hike comes as the US pressures trading partners to accelerate negotiations, with a 90-day pause on broader "reciprocal" tariffs set to expire in early July. While the UK has secured a deal, tensions with China and the EU are intensifying. Legal challenges to Trump's tariff strategy are also unfolding, with a federal appeals court temporarily allowing the measures to proceed despite an earlier ruling deeming them unlawful.
On the other hand, Eurozone inflation dropped to 1.9% in May—below the European Central Bank's 2% target—for the first time in years, driven by lower energy prices and a sharp slowdown in services inflation. Core inflation also eased to 2.3% from 2.7%, reinforcing expectations that the ECB will cut interest rates at its upcoming meeting.
With subdued wage growth, easing energy costs, and weak economic momentum, analysts widely expect further policy easing later this year, although geopolitical tensions and long-term structural pressures could limit the scope for aggressive cuts. Investors largely anticipate one or two more reductions in 2025, but longer-term inflation risks tied to global trade disruptions and demographic shifts remain on the ECB's radar.
Conclusion
With EURUSD sustaining its bullish structure and macro conditions aligning in favor of policy easing, the near-term outlook remains constructive—provided key support levels hold. While upcoming decisions from the ECB and U.S. labor data may inject short-term volatility, technical momentum continues to favor the upside. A confirmed break above 1.15729 could open the path to further gains, keeping higher resistance zones firmly in focus for market participants.