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    Euro Struggles Near $1.04 as the Dollar Strengthens

    January 23, 2025

    Key Points:

    • The Fibre (EURUSD) trades near $1.04, facing resistance at the 50-day moving average, after retreating from a high of $1.04569.
    • The US dollar retains strength amid expectations of economic expansion driven by Trump’s policies.
    • The European Central Bank’s dovish outlook continues to weigh on the euro’s recovery prospects.

    The EURUSD pair hovered near $1.04 on Wednesday morning, with traders assessing the impact of President Donald Trump’s economic policies, including tariffs, deregulation, and tax reforms. The euro reached an intraday high of $1.04569, before pulling back to close at $1.03943, encountering resistance at the 50-day moving average, which remains a key hurdle for bullish momentum.

    The lack of strong upside catalysts, coupled with expectations of further monetary easing from the European Central Bank (ECB), has limited the euro’s potential for a sustained rebound. Traders remain cautious, with the broader outlook for the eurozone economy looking fragile amid weaker growth forecasts and persistent inflation concerns.

    Technical Analysis

    Picture: The Fibre (EURUSD) faces selling pressure as stronger US economic data weighs on the euro, as seen on the VT Markets app.

    The EURUSD pair remains under pressure after failing to break above the $1.04569 resistance level, which aligns with the 50-day moving average. The pair currently trades near the $1.03943 mark, with support seen at $1.03895. A break below this level could pave the way for further declines toward the $1.0350 area.

    On the upside, a sustained move above $1.04569 would need strong buying momentum to target the next resistance zone at $1.0500. However, with the current bearish bias reflected in the MACD indicator and moving averages, the outlook remains tilted in favour of further downside pressure. A further decline in momentum could signal additional downside movement.

    US Dollar Retains Control

    The US dollar continues to maintain its dominance, with Trump’s policies expected to provide further support for economic expansion. High tariffs on US imports, alongside potential deregulation and stricter immigration measures, could boost domestic growth and strengthen the greenback’s valuation.

    In contrast, Europe faces economic headwinds, with the ECB expected to persist with its rate-cutting agenda. The widening policy divergence between the Federal Reserve and the ECB adds to the euro’s struggles, reinforcing the dollar’s position as the preferred currency in the current market environment.

    What’s Next for the Fibre?

    Traders will closely watch further developments in US trade policies and upcoming ECB policy decisions for clues on the EURUSD pairing’s future trajectory. As long as economic divergence between the US and eurozone persists, the dollar is likely to maintain its upper hand, while the euro may continue to struggle against key resistance levels.

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