EUR/USD price stays under pressure at $1.03 as ECB rate cut expectations mount
EUR/USD faces resistance at 1.03
EUR/USD is facing a critical test, trading below the 1.03 mark, as the broader bearish trend continues to dominate. The pair has struggled to break above this key psychological level, which aligns with the Fibonacci 50% retracement near 1.029, stalling upward momentum.
As traders await fresh catalysts from upcoming economic data and European Central Bank (ECB) commentary, the outlook for EUR/USD remains highly dependent on these developments.
The euro (EUR) is under pressure due to expectations of further rate cuts by the ECB. These expectations were reinforced by the latest ECB meeting minutes, which revealed a consensus among policymakers on a gradual approach to rate cuts while keeping the door open for additional reductions. This dovish stance has left the Euro vulnerable against the U.S. dollar, which is benefiting from a higher-yield environment in the U.S.
EUR/USD price downside risks persist with RSI in bearish territory
Since Thursday EUR/USD’s price action has been confined below the 1.03 resistance which aligns with the Fibonacci 50% retracement level. During Friday’s European session, the pair hovered around 1.029, unable to challenge the next resistance level near 1.031. This resistance coincides with the 2024 low for EUR/USD and is reinforced by the 100-period Exponential Moving Average (EMA) on the 4-hour chart, presenting a significant obstacle for any near-term recovery.
EUR/USD price dynamics (November 2024-January 2025). Source: TradingView.
On the daily chart, the Relative Strength Index (RSI) remains firmly in bearish territory, indicating that sellers continue to dominate the market. As long as the RSI stays below the neutral 50 mark, the downside risks for EUR/USD are likely to outweigh any potential bullish retracements.
Traders are now turning their attention to key eurozone data releases later today, including the Eurozone Current Account and the Harmonized Index of Consumer Prices (HICP). These reports could provide fresh direction for the pair, determining whether EUR/USD can stage a meaningful rally or face intensified selling pressure toward new lows.
EUR/USD recovered 1.7% earlier this week, reaching a five-day high of 1.03560. The latest US CPI report caused traders to reassess expectations for Federal Reserve policy.
