EUR/USD faces downward pressure near 1.0450 as USD rebounds following hawkish Fed commentary
ECB policymaker highlights Germany's export vulnerability amid potential US tariff increases
Market participants await FOMC meeting minutes for additional policy clarity
The pi network price predictionEUR/USD currency pair continues its corrective movement during Tuesday's European trading session, testing support near 1.0450 after unsuccessful attempts to sustain gains above the psychologically significant 1.0500 level. This pullback coincides with renewed strength in the US Dollar Index (DXY), which has recovered from recent lows to approach the 107.00 threshold at publication time.
Several Federal Reserve officials have recently reinforced expectations that current benchmark rates between 4.25%-4.50% may persist longer than previously anticipated. Fed Governor Michelle Bowman emphasized the need for "greater confidence" in sustained inflation moderation before considering policy adjustments, while Philadelphia Fed President Patrick Harker cited balanced labor market conditions and persistent price pressures as justification for maintaining the status quo.
Market focus now shifts to Wednesday's release of January FOMC meeting minutes, which may provide additional insight into the central bank's policy trajectory. Recall that Fed Chair Jerome Powell previously indicated that any monetary easing would require clear evidence of inflation control or labor market softening.
Key factors influencing EUR/USD movement
European Central Bank official Joachim Nagel has raised concerns about potential economic headwinds for Germany, particularly regarding proposed US automotive tariffs. With $24.3 billion in annual vehicle exports to the United States, the German economy remains particularly exposed to trade policy changes.
Market expectations currently price in three additional ECB rate reductions this year, reflecting concerns about potential inflation undershooting the 2% target. This dovish outlook continues to limit the Euro's upside potential against its major counterparts.
Technical perspective on EUR/USD
From a chart analysis standpoint, EUR/USD maintains an overall constructive technical posture despite the recent pullback from 1.0500 resistance. The pair continues to trade above its 50-day Exponential Moving Average near 1.0430, suggesting the broader uptrend remains intact.
Traders are monitoring the 14-day Relative Strength Index (RSI), which currently tests the 60.00 level. Sustained momentum above this threshold could signal renewed buying interest, while failure to hold the 1.0430 support zone may prompt a test of the February 10 low at 1.0285. On the upside, the December peak near 1.0630 represents the next significant resistance area for Euro bulls.
