The EUR/USD currency pair experienced a pullback on Wednesday, retreating from session highs of approximately 1.1372 to trade around 1.1323. This movement occurred within an ascending channel formation on the 60-minute chart, indicating potential for further fluctuations.
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Technical Analysis: Ascending Channel and RSI Indicators
On the 60-minute chart, EUR/USD maintains an ascending channel pattern. The 14-hour Relative Strength Index (RSI) has dipped, suggesting the pair is approaching oversold conditions, which could signal a potential reversal or consolidation.
Key support levels to monitor include 1.1274 and 1.1224, while resistance is seen near 1.1372 and 1.1422.
Fundamental Overview: Diverging Economic Indicators
U.S. Economic Data
The Federal Reserve opted to keep the base interest rate unchanged at 4.5%, aligning with market expectations. The ISM Services PMI for April surpassed forecasts, registering at 51.6, up from 50.8 in March. Conversely, the S&P Global Composite PMI for April fell short of expectations at 50.6, down from 51.2, indicating mixed economic signals.
Eurozone Economic Data
In the Eurozone, March retail sales declined by 0.1% month-over-month, missing the expected 0% change. Year-over-year, retail sales grew by 1.5%, slightly below the anticipated 1.6%. German factory orders for March exceeded expectations, rising by 3.6% month-over-month, compared to the forecasted 1.3%.
Outlook: Monitoring Key Levels and Economic Releases
Traders should monitor the 1.1323 level for potential support. A sustained move below this level could target 1.1274 and 1.1224. Conversely, a rebound above 1.1372 may lead to a retest of 1.1422.
Upcoming economic data, including U.S. initial jobless claims and Eurozone economic indicators, will be crucial in determining the next directional move for EUR/USD.
Note: This analysis is based on data available as of May 7, 2025, and is subject to change as new information becomes available.
