Key economic events on Friday include Germany’s preliminary CPI, Canada’s GDP, and the U.S. Core PCE Price Index, all of which could drive market volatility.
EURUSD recently rallied before reversing below key moving averages, signaling a potential downtrend. Traders are closely watching resistance and support levels for price movements. Meanwhile, central banks remain in focus, with the ECB hinting at further rate cuts amid sluggish growth, while the Fed holds rates steady, balancing inflation and economic stability. Market participants will assess these developments for future policy direction.
High Impact Economic Events
Friday All Day – Europe: German Prelim CPI m/m (EUR)
Friday 15:30 (GMT+2) – Canada: GDP m/m (CAD)
Friday 15:30 (GMT+2) – USA: Core PCE Price Index m/m (USD)
Chart Analysis
After bouncing off the low of 1.01768 on January 13, triggered by a Spinning Bottom candlestick pattern, the EURUSD rallied above the 50-period Exponential Moving Average (EMA) and reached a high of 1.05321, marking an increase of 3%. However, the bulls were unable to sustain this rally, which led to a decline in the EURUSD exchange rate below both the 20-period and 50-period EMA, signaling the start of a downward trend.
Currently, momentum indicators are showing mixed signals. The Momentum Oscillator is hovering above the critical threshold of 100, suggesting upward pressure, while the Relative Strength Index (RSI) has dropped below the neutral level of 50, indicating increased selling interest. Furthermore, the 20-period EMA has yet to cross below the 50-period EMA.

Key Resistance Levels
Should the buyers take market control, traders may direct their attention toward the four potential resistance levels below:
1.04256: The initial resistance level is identified at 1.04256, aligning with the weekly Pivot Point, PP, estimated using the standard methodology.
1.05321: The second price target is set at 1.05321, representing the daily high reached on January 27.
1.05865: The third price objective is observed at 1.05865, corresponding with the weekly resistance, R1, calculated using the standard Pivot Points methodology.
1.06645: An additional upside target is projected at 1.06645, mirroring the 423.6% Fibonacci Extension drawn from the high point, 1.03532, to the low point, 1.02581.
Key Support Levels
Should the sellers maintain market control, traders may consider the four potential support levels listed below:
1.03532: The initial support level is estimated at 1.03532, corresponding to the peak from January 15.
1.02581: The second support level is identified at 1.02581, representing a recent swing low.
1.01768: The third support level is seen at 1.01768, reflecting the daily low marked January 13.
1.00747: An additional downside target is 1.00747, mirroring the weekly support, S3, calculated using the standard Pivot Points methodology.
Fundamentals
The European Central Bank (ECB) cut interest rates for the fifth time since June, signaling another reduction in March as weak economic growth outweighs inflation concerns. ECB President Christine Lagarde emphasized a data-driven approach to future rate decisions. Policymakers expect minimal resistance to the next cut, but debate may intensify over deeper easing. With the eurozone economy stagnating, the ECB continues its dovish stance despite the U.S. Federal Reserve’s rate pause. While easing wage growth and stable oil prices support further cuts, inflation risks and labor shortages could limit the extent. Markets anticipate the ECB’s deposit rate to fall below neutral levels, potentially reaching 1.75% by September 2025.
On another note, the Federal Reserve kept interest rates at 4.25% to 4.5%, citing solid growth, a stable job market, and moderate inflation. It remains focused on its 2% inflation goal while reducing Treasury and mortgage-backed securities holdings. Future rate changes will depend on economic data and financial conditions, with flexibility to adjust if needed.
Conclusion
With key economic data releases and central bank policies in focus, market volatility remains a key factor for traders. EURUSD’s recent price action suggests continued uncertainty, with resistance and support levels offering potential trading opportunities. As the ECB moves toward further rate cuts and the Fed holds steady, economic indicators will play a crucial role in shaping future policy expectations. Market participants should remain attentive to upcoming data and evolving financial conditions for insight into potential market movements.