EUR/USD price prediction: Traders await ECB policy decision amid overbought conditions
EUR/USD price surges 4% in March, reaching 1.0825 before consolidation.
EUR/USD price has experienced a significant rally in the first four trading days of March, surging 4% from the 1.0400 psychological level to a peak of 1.0825.
However, this rapid appreciation has pushed the pair’s daily and 4-hour Relative Strength Index (RSI) into overbought territory, prompting a period of consolidation between 1.0825 and 1.0785 in today’s session. As market participants assess whether the rally has more room to extend, upcoming fundamental events, including the European Central Bank (ECB) rate decision, could dictate the next move.
The Eurozone’s latest retail sales report revealed a 1.5% year-on-year increase for January, falling short of the expected 1.9% and reflecting a slowdown from December’s revised 2.2% growth. On a monthly basis, sales declined by 0.3%, missing the anticipated 0.1% increase. This weak consumer demand data adds to concerns over the Eurozone’s economic outlook ahead of the ECB’s policy announcement.
ECB to announce rate decision today, Lagarde’s remarks key for EUR/USD outlook
The ECB is set to announce its interest rate decision today at 13:15 GMT, with President Christine Lagarde scheduled to hold a press conference at 13:45 GMT. The central bank is widely expected to maintain its current stance but could provide crucial insights into the timing of future rate cuts. Traders will be closely monitoring Lagarde’s tone and any revisions to the ECB’s economic projections, which could impact EUR/USD’s trajectory.
EUR/USD price dynamics (Oct 2024 - March 2025). Source: TradingView
Given the current consolidation phase, a retracement due to overbought RSI conditions could bring EUR/USD down to test the 1.0750 critical support level. If this level holds, the pair could resume its upward momentum toward a five-month high of 1.0950. However, a break below 1.0750 may signal a deeper correction, especially if the ECB delivers a dovish message that weakens the euro’s appeal.
Overall, EUR/USD’s near-term direction hinges on how the market interprets the ECB’s stance and broader economic data. A hawkish tilt from Lagarde could reinforce the bullish case, while any signs of economic fragility may prompt a pullback from recent highs.
Germany’s fiscal stimulus plans lifted the euro, driving EUR/USD higher for a third straight day. The pair broke above 1.0530 resistance, reaching a four-month high at 1.0690.
