The Euro is down 0.2% against the US Dollar as everyone awaits the European Central Bank’s policy decision. Recent preliminary PMIs show that manufacturing is at 49.8 and services have slightly exceeded expectations at 51.2. Market experts believe the ECB will keep interest rates the same, taking a neutral approach to future changes. A pending trade agreement between the US and EU on tariffs has given the Euro some upward momentum, continuing the positive trend seen since February.

Technical Indicators and PMI Data

The Relative Strength Index (RSI) at 60 indicates that the current trend is strong. The trend support is found at the 50-day moving average, which is at 1.1546. We expect resistance to be between 1.1700 and 1.1800, suggesting a potential range-bound situation in the short term. With the European Central Bank’s decision approaching, we think rates will stay the same, which is the view of most market analysts. However, a recent Reuters poll shows that over 90% of economists are now anticipating a rate cut in June, making the guidance moving forward very important. The latest composite PMI data from March, which shows a reading of 50.3 for the first time in ten months, suggests an economy that is stabilizing and may lessen dovish comments. This situation suggests a possible range-bound scenario, supported by the continued positive sentiment from the US/EU trade agreement on tariffs. We see an opportunity to sell volatility since the one-week implied volatility for EUR/USD has recently gone above 6% before the announcement. Strategies like short strangles or iron condors could be effective if the Euro stays within key technical levels after the meeting.

Trend and Resistance Levels

The current trend is strong, as suggested by the strength index reading, but it’s crucial to monitor key levels to manage risk. We find important trend support at the 50-day moving average, now around 1.0830, while significant resistance is near the 1.0950 level. Historically, failing to break through major resistance after important news often signals a pullback toward the moving average. Create your live VT Markets account and start trading now.

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