EUR/USD awaits key news from monetary policy makers

Markets are expecting a 25-basis point interest rate cut by the European Central Bank at its upcoming April meeting, aimed at mitigating the risks of a potential slowdown in European growth due to the impact of recent tariffs imposed by the Trump administration. Attention will also turn to the ECB’s press conference following the decision, where President Christine Lagarde may signal that interest rates are nearing neutral levels. However, she is also likely to maintain flexibility, leaving the door open for further cuts below 2% to address global trade tensions and their potential negative effects on European economic performance. Conversely, she may signal a pause in rate cuts if tariffs are suspended or significantly reduced, particularly if a trade agreement with the United States is reached. Notably, communication and negotiation channels with the Trump administration remain open, and the pace of talks could accelerate once the new German government takes office, expected in May.

How tariffs may affect monetary policy decisions?

The U.S. dollar index is currently trading near multi-year lows. A major factor behind the greenback’s weakness is the uncertainty surrounding President Trump’s tariff strategy, coupled with investors favouring traditional safe havens such as the Swiss franc and Japanese yen over the dollar.

In early April, President Trump imposed broad tariffs on most countries and subsequently increased tariffs on China in response to retaliatory measures. Later that month, he suspended tariffs on all countries except China for 90 days and temporarily exempted specific goods—such as electronics—from the new levies. Speculation is now mounting that the administration may introduce new tariffs on pharmaceuticals and rare metals, which are crucial for key sectors like weapons.

Meanwhile, the Trump administration is reportedly close to finalising a trade agreement with the Starmer government, potentially boosting trade volume and removing tariffs on goods exchanged with the United Kingdom.

Markets are also awaiting a speech by the Federal Reserve Chairman, scheduled for 9:15 PM UAE time today, for further insight into the Fed’s monetary policy stance and his perspective on addressing a possible rise in unemployment, as the economy shows signs of strain under ongoing tariff pressures.

EUR/USD at Multi-Year Highs

On April 11, the EUR/USD pair reached its highest level since February 2022, touching 1.1472. The Relative Strength Index (RSI) also rose above 70, indicating strong bullish momentum. However, prices retreated before the weekly session closed due to profit-taking. The pair is currently testing the high end of the existing trading zone between 1.1176 and 1.1386. A daily close above this level would confirm continued bullish control over the pair, potentially pushing it higher toward 1.1510. In this scenario, the resistance level of 1.1483 should be considered.

Key Levels in the Opposite Scenario

Failure to close above the high end of the 1.1176–1.1386 trading zone, would signal weakening bullish momentum. This could prompt some bulls to exit the market and encourage bears to enter, potentially driving the pair toward the low end of the current trading zone at 1.1176. A close below this low end of the zone could lead to a further decline toward 1.0981. In this case, the support level of 1.1110 should be monitored closely.

EUR/USD price – Daily Chart

Chart Source: ADSS Platform