04/08/25

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The euro-dollar currency pair maintains support above 1.1600 at the start of the trading week, amid a generally positive risk sentiment in financial markets. The euro benefits from improved market confidence in the European session, even though the economic calendar remains light for Monday, with no high-impact data scheduled. Slight upward movement toward 1.1650 suggests that the pair might continue to extend gains if the positive risk environment persists.

Market headlines over the weekend highlighted increasing trade tensions between the United States and the European Union. According to reports, the US administration is contemplating implementing tariffs ranging from 15% to 20% on EU imports. Although there’s optimism from US officials about reaching an agreement, the looming August 1 deadline poses a significant risk for tariffs to be enacted if negotiations do not advance. Meanwhile, the European Central Bank published its quarterly survey indicating that most Eurozone firms remain optimistic about economic growth but acknowledge ongoing challenges from trade disputes.

Equity futures point toward a cautiously optimistic beginning on Wall Street, with US stock index futures rising modestly. An optimistic market tone may promote risk appetite across asset classes, which could limit the dollar’s gains. Later in the week, investors will closely analyze the first flash readings of manufacturing and services PMI data from Germany, the Eurozone, and the US. These indicators are critical for assessing economic momentum and could influence the euro’s trajectory.

Technical levels show the euro/USD pair trading above the 200-period moving average on the four-hour chart, signifying some hesitance among sellers around that level. The immediate resistance is near 1.1650, aligned with a Fibonacci retracement, with key upside targets at 1.1700 and 1.1760. Support levels are positioned around 1.1615 and 1.1540, reflecting recent lows and retracement levels.

As the second most traded currency globally, the euro’s movements are closely tied to broader economic developments and monetary policy outlooks from the European Central Bank. Factors such as inflation rates, trade balances, and economic growth figures remain pivotal in shaping investor sentiment and influencing the euro’s value against the US dollar.