On Wednesday (February 26) in the European session, as the US dollar rebounded and followed the yield of US treasury bond bonds, the EUR/USD exchange rate was falling, and intraday trading was at 1.0498/99, down about 0.13%.

The US dollar index has risen to around 106.50, and the yields of US two-year and 10-year treasury bond bonds are also rising. However, after a series of weak data releases, the rise of the US dollar may be limited. Yesterday, the US consumer confidence index fell by 7 percentage points, marking the third consecutive month of decline and reaching a nearly four-year low.

Meanwhile, Richmond Fed President Thomas Barkin believes that this week, as the Fed continues to make progress in controlling inflation, the core personal consumption expenditure price index (PCE) will further cool down. However, he still believes it is necessary to adopt a wait-and-see attitude. Today's economic data release schedule in the United States is relatively light, with only new home sales data released. Tomorrow, the US Gross Domestic Product (GDP) data and Friday's Core Personal Consumption Expenditure (PCE) data will be the focus of attention.

Earlier this week, optimism surrounding the German elections and expectations of the possible establishment of a € 200 billion emergency defense fund provided support for the euro.

At the same time, data from the largest economy in the eurozone is not so encouraging, as the fourth quarter GDP data confirms a 0.2% month on month contraction.

The German Gfk Consumer Confidence Index released today was also weaker than expected, dropping from -22.6 in February to -24.7 in March, contrary to expectations of rising to -21. In the next few days, we will see a series of consumer and business confidence data releases in the European region.

These weak data were released before the European Central Bank meeting next week, and it is expected that the ECB will further cut interest rates by 25 basis points at this meeting.

ING believes that the euro has received some support, and the market sees Ukraine's mineral agreement as a positive factor. If this agreement can develop into a comprehensive security guarantee for the United States, European currencies may further rise, but given the shift in US foreign policy over the past month, this path is still full of great uncertainty.

ING believes that the 1.05 mark is the upper limit of the Euro/USD trading range for this quarter. The resistance level between 1.0530 and 1.0550 can prevent further appreciation of the exchange rate, and when the tariff issue becomes the focus again next week, it may pull the euro/dollar exchange rate back to 1.04 or even lower. If the euro/dollar exchange rate can trade below 1.0450, it can alleviate some upward pressure.

technical analysis

The rebound trend of the EUR/USD exchange rate since the low point of 1.02 in February has continued, with the exchange rate rising above the 50 day simple moving average (SMA), but failing to break through the key level of 1.0530, which it needs to break through to create higher highs. If it breaks through the level supported by a relative strength index (RSI) above 50, 1.06 will become the target of attention.