
Event to watch out for today:
15:30 EET. USD - Quarterly GDP Change in the United States
EURUSD:
The US Dollar is attracting buyers for the second consecutive day amid some repositioning trade ahead of the release of key US macroeconomic data this week. On the other hand, the common currency has been weakened by ‘soft’ signals from the European Central Bank (ECB), which is proving to be another factor acting as a headwind for EUR/USD. In fact, traders estimate the probability of another ECB rate cut in June at around 75%.
The bets were confirmed by ECB Policy Director Olli Rehn's remarks on Monday, who stated that underlying inflationary pressures in the Eurozone are easing and that we should not rule out a rate cut below neutral. Moreover, ECB executive board member Piero Cipollone said on Tuesday that trade policy uncertainty could reduce business investment and eurozone real GDP growth by around 0.2 per cent in 2025-26.
However, US dollar bulls seem reluctant to make aggressive bets amid concerns that Trump's unsustainable trade policies could trigger a sharp slowdown in the economy. In addition, strengthening expectations that the Federal Reserve (Fed) will soon resume its rate-cutting cycle is fuelling the dollar's decline and acting as a tailwind for EUR/USD, which requires some caution before positioning for any significant intraday decline.
Meanwhile in the US, the ADP private sector employment report, the advance Q1 GDP report and the Personal Consumption and Expenditure (PCE) price index are released. This could have an impact on the US dollar and give some momentum to the EUR/USD pair.
Trading recommendation: BUY 1.1390, SL 1.1370, TP 1.1480
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