The Euro (EUR) edged higher against the US Dollar (USD) on Thursday, with EUR/USD trading around 1.1726, up nearly 0.42% at the time of writing. This move came as the US Dollar Index (DXY) fell about 0.80% to 98.16, amid broad Greenback softness following possible intervention from Tokyo, where authorities were seen selling Dollars to support the Japanese Yen (JPY) [1]. The Euro also found support from the latest European Central Bank (ECB) monetary policy decision, in which all three key interest rates were left unchanged, aligning with market expectations [1].
The ECB noted that the ongoing Middle East conflict is pushing energy prices higher, which is lifting inflation but weighing on economic growth. Policymakers reiterated their commitment to a data-dependent approach and to ensuring inflation stabilizes at the 2% target in the medium term [1]. Preliminary data released earlier in the day showed the Harmonized Index of Consumer Prices (HICP) rose 3% year-over-year in April, up from 2.6% in March and marking the highest level since September 2023, with energy prices cited as the main driver [1].
ECB President Christine Lagarde stated that a rate hike was discussed extensively and the decision to hold rates was unanimous. Markets are currently pricing in two to three rate hikes this year, though traders remain cautious about the ECB's ability to hike aggressively due to the Eurozone's exposure to energy shocks [1].
From a technical perspective, EUR/USD is holding above the 200-day Simple Moving Average (SMA) at 1.1676, maintaining a mild bullish bias while consolidating just below the 50.0% Fibonacci retracement at 1.1747. The Relative Strength Index (RSI) at 54.4 is slightly positive, while the MACD has slipped marginally into negative territory, suggesting that upside momentum is losing some traction. The Average Directional Index (ADX) near 22.2 indicates modest trend strength. Key resistance levels are at 1.1747, 1.1826, and 1.1924, while support is seen at 1.1676, 1.1667, 1.1555, and 1.1411 [1].
CONCLUSION
The Euro's modest gains against the US Dollar reflect both ECB policy stability and rising inflation driven by energy prices. While markets anticipate potential rate hikes later this year, caution prevails due to ongoing energy market risks. Technical indicators suggest a mildly bullish outlook, but momentum appears to be waning.