EUR/USD retreats 0.5% from four-day high amid ECB dovish outlook
EUR/USD price faced a reversal of its recent gains after reaching a four-day high of 1.0445 on February 5th.
The rally, which marked a third consecutive up-close day in February, was halted by the 50-day exponential moving average (EMA), a key technical resistance level. As a result, the pair ended the day at 1.0404, giving back nearly half of its earlier gains.
As of February 6th, EUR/USD continues to face downward pressure, declining 0.5% and trading at 1.0378 in the European session. This puts the pair below the previous day’s low of 1.0370, maintaining the broader bearish sentiment. The Relative Strength Index (RSI) on both the 4-hour and daily charts has now moved from bullish to neutral territory, indicating a loss of the short-term upward momentum.
EUR/USD outlook: ECB inflation target weighs on Euro as U.S. dollar strengthens
Looking ahead, EUR/USD faces near-term support at 1.0331, where further declines could test the pair’s resilience.
EUR/USD price dynamics (December 2024-February 2025). Source: TradingView.
The technical outlook, combined with ongoing expectations of ECB policy easing, continues to weigh on the euro. ECB officials remain confident that inflation will return to the central bank’s target of 2% by the end of 2025, which keeps the pressure on the euro in the face of a stronger US Dollar.
In terms of economic data, traders are awaiting Eurozone Retail Sales figures for December, which are expected to show a 1.9% year-over-year increase, up from 1.2% in November. However, the month-on-month figure is forecasted to decline by 0.1%, which could further affect the Euro’s near-term performance.
While EUR/USD showed some signs of recovery earlier this week, technical resistance and dovish ECB expectations continue to limit upside potential. The pair’s near-term outlook remains focused on potential support at 1.0331, with any break below this level likely to reinforce a bearish trend.
Eurozone inflation increased to 2.5%, which contributed to EUR/USD facing key technical resistance. The pair saw volatile price action, surging 1.1% the week.
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