The EUR/USD pair has risen to 1.0900, recovering from earlier dips this week. This rebound follows announcements about US government funding measures that reduce the risk of a shutdown.
A key event for the Euro is the impending vote in the German Bundestag on defence spending. If a two-thirds majority is achieved, it may bolster the Euro significantly.
Gold Prices Surge
Gold prices have surged past $3,000 amid concerns over economic growth. The preliminary consumer sentiment index in the US fell to 57.9, missing expectations considerably.
In currency movements, the CME Fedwatch Tool indicates a 97% probability that the Federal Reserve will maintain current interest rates in the upcoming meeting. Predictions suggest a 32.8% chance of a rate cut in May, and a 78.5% likelihood of reduced rates by June.
Technically, the EUR/USD pair is poised to close above an ascending trend line, with 1.1000 serving as a key level. If it can breach this, there is potential for further movement into the 1.1000-1.1500 range.
The rise in the EUR/USD pair to 1.0900 reflects renewed confidence, largely due to reduced concerns over a US government shutdown. This shift in sentiment follows recent funding measures from Washington, which alleviated some instability that had been weighing on markets earlier this week. With that immediate risk fading, the focus now turns to Europe, particularly Germany.
The upcoming Bundestag vote on defence spending could be pivotal for the Euro. A two-thirds majority would indicate strong political unity, which markets tend to favour. If this level of support materialises, the Euro may find further strength, building on its recent recovery. In the absence of such a majority, however, uncertainty could return, potentially limiting gains.
Gold’s jump past $3,000 underscores ongoing caution about economic growth globally. The latest consumer sentiment data from the US, coming in at 57.9—well below estimates—suggests waning confidence. That reading offers insight into how consumers perceive future conditions, and falling sentiment figures typically signal concerns about the broader economy.
Interest Rate Expectations
Interest rate expectations remain influential. The CME FedWatch Tool shows a 97% chance of rates holding steady in the next Federal Reserve meeting, reinforcing the idea that immediate monetary policy shifts are unlikely. However, forecasts continue pointing to lower rates later in the year, with the probability of a cut by May at 32.8% and a reduction by June standing notably higher at 78.5%. These probabilities will continue to shape currency movements in the near term.
From a technical standpoint, the EUR/USD pair appears set to close above a rising trend line. The 1.1000 mark is in focus, acting as a point of resistance. A breakout past this could open the door for further movement towards the 1.1000-1.1500 range, which would indicate a broader upward trend taking hold. Traders monitoring this setup will be watching closely for confirmation.
Given these developments, those involved in derivatives should weigh near-term opportunities against these broader shifts in monetary policy, economic sentiment, and key levels in price action.
