A series of key economic releases this week—including US CPI, UK GDP, and Swiss CPI—will likely influence currency markets, especially given the US dollar’s recent strength. On the technical front, EURUSD has seen a potential bullish reversal after a lengthy downtrend, highlighted by a long white candlestick. However, price remains below the 50-period EMA, with momentum indicators still showing weakness, suggesting downside risk persists. Fundamentally, the dollar has gained ground as tariffs imposed by President Donald Trump deepen trade uncertainties, sparking concerns about inflation and prompting traders to stay long on the greenback.
Overview
A series of key economic releases this week—including US CPI, UK GDP, and Swiss CPI—will likely influence currency markets, especially given the US dollar’s recent strength. On the technical front, EURUSD has seen a potential bullish reversal after a lengthy downtrend, highlighted by a long white candlestick. However, price remains below the 50-period EMA, with momentum indicators still showing weakness, suggesting downside risk persists. Fundamentally, the dollar has gained ground as tariffs imposed by President Donald Trump deepen trade uncertainties, sparking concerns about inflation and prompting traders to stay long on the greenback.
Key Economic Events
Wednesday 15:30 (GMT+2) - USA: CPI m/m (USD)
Wednesday 17:30 (GMT+2) - USA: Crude Oil Inventories (USD)
Thursday 09:00 am (GMT+2) - UK: GDP m/m (GBP)
Thursday 09:30 am (GMT+2) - Switzerland: CPI m/m (CHF)
Thursday 15:30 (GMT+2) - USA: PPI m/m (USD)
Thursday 15:30 (GMT+2) - USA: Unemployment Claims (USD)
Friday 15:30 (GMT+2) - USA: Retail Sales m/m (USD)
Technical Analysis
The EURUSD currency pair has been in a prolonged downward trend for the past five months, reaching a low of 1.01772. However, on February 3rd, a long white candlestick pattern emerged, suggesting a potential reversal and signaling the end of the downtrend, with the possibility of an upward movement beginning.
Despite this potential shift, the EURUSD exchange rate remains below the 50-period Exponential Moving Average, which indicates negative market sentiment. Supporting this bearish outlook, momentum indicators are still weak. The Momentum Oscillator and the Relative Strength Index (RSI) both register values below their neutral levels of 100 and 50, respectively, which suggests ongoing downward pressure and increases the likelihood of further declines.
Potential Upside Targets
Should the buyers take market control, traders may direct their attention toward the four potential resistance levels below:
1.04419: The initial price target is set at 1.04419, which represents the high point recorded on February 5.
1.05326: The second resistance is identified at 1.05326, representing the swing high from January 27.
1.06597: The third support level is identified at 1.06597, reflecting the weekly resistance, R3, calculated using the standard Pivot Points methodology.
1.08176: An additional price target is projected at 1.08176, representing the 61.8% Fibonacci Retracement drawn from 1.12134 to 1.01772.
Potential Downside Targets
Should the sellers maintain market control, traders may consider the four potential support levels listed below:
1.01772: The first level of support is determined at 1.01772, representing the trough from January 13.
1.01104: The second support is identified at 1.01104, representing the weekly support, S3, calculated using the standard Pivot Points methodology.
1.00665: The third support level is identified at 1.00665, reflecting the 161.8% Fibonacci Extension drawn from 1.02099 to 1.04419.
0.98345: An additional downward target is 0.98345, mirroring the 261.8% Fibonacci Extension drawn from 1.02099 to 1.04419.
Fundamentals
The dollar strengthened against most major currencies after President Donald Trump announced 25% tariffs on steel and aluminum imports, heightening trade uncertainties. Concerns that these tariffs could stoke inflation and keep the Federal Reserve cautious on rate cuts bolstered demand for the greenback. Speculators remain heavily long on the dollar, while major banks project further gains amid Trump’s continued use of tariffs as a strategic negotiating tool.
Conclusion
While a bullish reversal in EURUSD is possible, the pair remains under pressure as technical indicators point to continued weakness. With the US dollar buoyed by upcoming economic releases and heightened trade tensions—exacerbated by new tariffs—sentiment favors continued dollar strength. Traders should watch key support and resistance levels alongside the week’s critical data points to gauge the next significant market move.