On Tuesday, the Euro (EUR) traded lower against the British Pound (GBP), testing two-week lows at 0.8630, with bearish momentum building up. Mixed economic data from Germany failed to provide support for the EUR/GBP pair, although expectations that the European Central Bank (ECB) will hike rates on Thursday are preventing further depreciation of the Euro [1]. German Industrial Production rebounded in April, following two consecutive contractions, while the trade surplus narrowed moderately, contrary to expectations. The data had minimal impact on Euro crosses [1].
Meanwhile, the Euro ticked up for the second consecutive day against the US Dollar (USD), trading at session highs of 1.1555, up from 1.1500 lows on Monday. This upward movement was supported by hopes that the ECB will tighten monetary policy this week and by mild risk appetite weighing on the safe-haven US Dollar [2]. German Industrial Production grew by 0.4% in April, matching market consensus, after an upwardly revised 0.1% contraction in March and a 0.5% fall in February. The German Trade Balance showed a EUR 14.5 billion surplus in April, down from EUR 14.7 billion in March and below market expectations of EUR 15 billion [2].
The ECB is widely expected to hike its deposit rate by 25 basis points to 2.25% on Thursday, amid high inflation, and may hint at a pause due to sluggish Eurozone growth. ECB President Christine Lagarde is likely to confirm the rate hike later in the day [1][2]. Technical analysis indicates that EUR/GBP trades at 0.8634, just above two-week lows, after breaching the base of a symmetrical triangle pattern. Momentum indicators such as the RSI and MACD endorse the bearish view, with a break of the 0.8630 support level potentially bringing 2026 lows in the area of 0.8610–0.8620 into focus. On the upside, resistance is capped at 0.8637, with further targets at 0.8655 and 0.8665 if price action reverses [1].
On the geopolitical front, an Israeli attack on the Lebanese city of Tyre killed eight people, despite US President Donald Trump’s warning to halt hostilities. Trump also expressed optimism about reaching a deal with Tehran, which has triggered a moderate risk-on mood in financial markets [2]. Improved market sentiment is weighing on demand for the safe-haven US Dollar, although downside attempts remain limited. Investors are awaiting Wednesday’s US Consumer Price Index (CPI) data for further insight into the Federal Reserve’s forward path [2].
The Euro was the strongest against the Japanese Yen today, with a 0.30% gain, but weaker against the GBP (-0.11%) and USD (-0.27%) [1].
CONCLUSION
The Euro's performance is being shaped by expectations of an ECB rate hike and mixed German economic data, with technical and sentiment indicators pointing to continued volatility. While the Euro has trimmed losses against the USD, bearish momentum persists against the GBP. Market participants are closely watching upcoming ECB and US economic releases for further direction.