EUR/USD Strengthens To 1.1485 Area, Fresh High Since February 2022 Amid Weaker USD
The EUR/USD pair broke out of its multi-day trading range and touched a fresh high since February 2022, around the 1.1485 area during the Asian session on Monday (4/21). The momentum was sponsored by the bearish sentiment surrounding the US Dollar (USD), which supported the prospects for an extension of the recently well-established uptrend.
Despite aggressive comments from Federal Reserve (Fed) Chairman Jerome Powell, uncertainty over US President Donald Trump’s trade policies continued to undermine the Greenback. Powell said last Wednesday that the Fed is likely to keep its benchmark interest rates steady and wait for greater clarity before considering any adjustments to its policy stance. Meanwhile, Trump’s back-and-forth tariff announcements have dented investors’ confidence in US economic growth and dragged the USD to a two-year low at the start of a new week.
The aforementioned factors, to a larger extent, offset last week’s dovish decision by the European Central Bank (ECB) and acted as a tailwind for the EUR/USD pair. The ECB cut interest rates for the seventh time in a year on Thursday and warned that economic growth would take a major hit from US tariffs, strengthening the case for further policy easing in the coming months. However, this did little to generate any meaningful seller interest around the shared currency, validating the near-term positive outlook for the pair amid relatively thin liquidity on Easter Monday.
Moving ahead, traders this week will take cues from scheduled speeches by ECB President Christine Lagarde on Tuesday and a slew of influential FOMC members later in the week. Apart from this, the market focus will be on the release of flash PMIs, which might provide fresh insights into the health of the global economy. This, in turn, might provide some impetus to the USD and the EUR/USD pair. That said, the fundamental backdrop suggests that the path of least resistance for the pair remains to the upside and any correction is likely to be in the offing.
Source: FXStreet
