New Selling Opportunity if the Bearish Structure Remains Intact

Economic

Central Bank

Summary:

Traders will be closely monitoring price action around these resistance levels, as a rejection from the trendline could present an opportunity for short positions.

SELL EURUSD

Close Time

CLOSED

1.03700

Entry Price

1.02500

1.04250

1.16426 -0.00019 -0.02%

55.0

Pips

Loss

1.02500

1.04250

Exit Price

1.03700

Entry Price

1.04250

The Chairman of the U.S. Federal Reserve, Jerome Powell, maintained a firm stance on monetary policy this Tuesday, signaling that there is no urgency to continue cutting interest rates despite public pressure from President Donald Trump.

“We do not need to rush to adjust our policy,” Powell stated before the Senate Banking Committee during his semiannual monetary policy report.

Powell emphasized that lowering interest rates too quickly or by too much could hinder inflation progress, while moving too slowly or by too little could unnecessarily weaken economic activity and employment.

The Federal Open Market Committee (FOMC) halted its rate-cutting cycle on January 29, keeping rates steady within the 4.25%–4.5% range, after a series of reductions that began in September.

Meanwhile, market participants remain cautious following Trump’s latest executive orders, which impose a 25% tariff on steel and aluminum imports from all countries, set to take effect on March 12. Additionally, the U.S. president announced upcoming reciprocal tariffs against nations engaged in what he deems unfair trade practices. Trump’s agenda aims to boost domestic production and reduce dependence on foreign metals.

Investors are increasingly concerned that these trade policies could escalate into a global trade war, further fueling inflationary pressures in the U.S. economy.

On the other side of the Atlantic, European Central Bank (ECB) President Christine Lagarde addressed EU lawmakers, noting that inflationary pressures in the Eurozone were easing and that the ECB remained on track to reach its 2% inflation target this year.

However, Lagarde cautioned that heightened trade tensions pose a downside risk to economic growth. Shaun Osborne, Chief FX Strategist at Scotiabank, noted that markets are currently pricing in at least 75 basis points of additional ECB rate cuts by year-end. Any further escalation in trade disputes could reinforce expectations of further monetary easing, keeping the euro in a vulnerable position.

From a monetary policy perspective, the euro remains susceptible to further downside risks due to the widening rate differential between the ECB and the Fed. Market participants have fully priced in three ECB rate cuts, expected to begin by the summer, underpinned by expectations that inflationary pressures will sustainably return to the central bank’s 2% target. New Selling Opportunity if the Bearish Structure Remains Intact_1

New Selling Opportunity if the Bearish Structure Remains Intact_1

Technical Analysis

EUR/USD has recovered from its early-week losses, rebounding from 1.0286 to its current level of 1.0350 amid heightened geopolitical tensions. The pair is now approaching key technical levels, with the 200-period moving average acting as immediate resistance, closely followed by the 100-period moving average. The next upside target is seen at 1.0370, a level that, if defended by sellers, could trigger a bearish reaction.

The Relative Strength Index (RSI) currently sits at 52, indicating neutral momentum. However, a closer look at the price action reveals a developing triangle pattern. If this formation holds, selling pressure could emerge as the price nears the upper boundary of the descending trendline. On the other hand, a decisive breakout above this level could pave the way for further bullish continuation.

Traders will be closely monitoring price action around these resistance levels, as a rejection from the trendline could present an opportunity for short positions, while a breakout could shift sentiment toward further upside potential.

Trading Recommendations

Trading direction: Buy

Entry price: 1.0370

Target price: 1.0250

Stop loss: 1.0425

Validity: Feb 21, 2025 15:00:00

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New Selling Opportunity if the Bearish Structure Remains Intact

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