The EUR/USD pair trimmed earlier losses and hovered around the 1.1230 mark during Friday’s Asian session, stabilizing after a drop sparked by renewed US Dollar (USD) strength. The greenback gained traction following better-than-expected U.S. economic data and easing concerns over global trade tensions.
U.S. President Donald Trump announced a “major” trade agreement with the United Kingdom (UK), offering temporary relief to markets. However, investor optimism was capped by the fact that key tariffs—particularly a sweeping 10% levy—remain in place. Market focus has now shifted to preliminary U.S.-China trade talks in Switzerland over the weekend. Despite the high-level engagement, both sides have tempered expectations for any immediate breakthroughs.
Trump’s appointment of a new envoy to Beijing and continued hardline stance on China indicate limited short-term progress. Though exemptions on certain tariffs are being considered, Trump clarified the U.S. is “not looking for so many exemptions,” reinforcing the administration’s cautious approach.
Meanwhile, U.S. labor market data continues to show resilience. Initial jobless claims dropped to 228,000 for the week ending May 3, just below consensus and down from 241,000 the week prior. While the four-week moving average inched up slightly to 226,000, continuing claims declined by 29,000 to 1.879 million—signaling underlying strength in employment.
On the Eurozone front, the single currency remains under pressure amid rising expectations of a rate cut by the European Central Bank (ECB), potentially at its June meeting. Although ECB policymakers maintain their inflation goal of 2% by year-end, concerns over stagnating economic growth have prompted more dovish signals.
Outlook:
The EUR/USD pair’s short-term direction will depend on upcoming developments in U.S.-China trade talks, further U.S. economic data, and ECB policy commentary. With markets increasingly leaning toward divergent monetary policies—hawkish from the Fed and dovish from the ECB—the USD may continue to outperform the EUR in the near term.
Technical Snapshot:
Support levels: 1.1210, 1.1185, 1.1150
Resistance levels: 1.1260, 1.1285, 1.1320
Bias: Bearish below 1.1260; possible consolidation near 1.1230 ahead of U.S. and ECB developments
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