On Wednesday (April 16th), the EUR/USD exchange rate began to rebound, breaking through the level of 1.1390 during the European trading session, breaking away from the brief correction on Tuesday. As the US dollar index falls to around 99.50, market focus shifts to the upcoming interest rate decision by the European Central Bank and US retail sales data.

Fundamental analysis

Traders are preparing for further weakness of the US dollar and an upward trend in the euro dollar exchange rate, mainly due to the market questioning the structural attractiveness of the US dollar caused by President Trump's unpredictable tariff policies.

Analysts predict that due to the weakening of the attractiveness of the US dollar as a "reserve and safe haven asset," the euro dollar exchange rate is expected to rise to 1.1500, and the "high liquidity of the euro" is expected to "absorb most of the funds transferred from the US dollar

In Wednesday's trading, the market will focus on the March retail sales data in the United States, with strong growth expected to reach 1.3% for the month, compared to only 0.2% growth in February. Meanwhile, the European Central Bank is expected to cut interest rates for the sixth consecutive time, lowering the deposit facility rate by 25 basis points to 2.25%.

Technical analyst interpretation:

From the 60 minute chart, it can be seen that the euro against the US dollar is competing for key technical positions. The exchange rate is currently trading near two moving averages, with the MACD indicator showing DIFF at 0.0013, DEA:0.0006，MACD: 0.0014, showing slight bullish momentum. The RSI index reading is 58.3178, which is in a neutral to strong state but has not yet reached the overbought area. It is worth noting that the price has formed a relatively obvious upward channel after experiencing the low point of 1.1263, and is currently trying to break through the resistance level of 1.1400. If it can be effectively broken through, the next target will point to the level of 1.1430.

From the daily chart analysis, the euro against the US dollar has completed a strong upward trend starting from the low of 1.0177, reaching a peak of 1.1472. The RSI index reading is 72.4824, which is in the overbought area, indicating that there may be a short-term risk of a pullback. However, the MACD histogram expands, DIFF:0.0156，DEA:0.0116，MACD: 0.0079 indicates that the medium-term upward momentum remains strong. The current exchange rate has stabilized at the support level of 1.1270, which may become a key defense against future downside risks. If the exchange rate can continue to stand at the 1.1400 level, it will create conditions for further challenging the high before 1.1472.

Market sentiment observation

The market sentiment is currently optimistic, mainly supported by a significant slowdown in service sector inflation in the eurozone, which has strengthened traders' confidence that the European Central Bank will cut interest rates on Thursday. The service sector inflation increased by 3.4% year-on-year in March, the lowest growth rate since July 2022.

The market's concerns about the trade situation have eased, and Spanish Economy Minister Courpo said after meeting with US Treasury Secretary Vicente that he believes the EU and the US will soon reach a fair agreement. Kulpo said, "We are confident that under the leadership of EU Trade Commissioner Sevkovic in European negotiations, we will be able to reach a balanced, fair, and mutually beneficial agreement

The high liquidity of the euro has become an important support for its attractiveness, and as market concerns about the long-term prospects of the US dollar increase, the euro is becoming one of the main safe havens for funds.

Future prospects

Short term outlook: The EUR/USD exchange rate may continue to test the key resistance level of 1.1430. The interest rate decision of the European Central Bank on Thursday will be the main catalyst for recent fluctuations. If the ECB cuts interest rates as expected but conveys confidence in inflation control, the exchange rate is expected to break through 1.1430 and further challenge the psychological barrier of 1.1500.

Mid term outlook: Although there may be a technical correction in the short term, as long as the exchange rate can hold the support level of 1.1270, the medium-term trend will still remain upward. Traders are paying attention to the details of the European Central Bank's monetary policy path and Germany's fiscal stimulus plan, which may affect the euro's medium-term performance. Standard Chartered Bank analysts predict that "if the European Central Bank cuts interest rates this month, then the June meeting may choose to hold its fire

Analysts believe that the attractiveness of the US dollar is facing structural challenges, and unless there is a significant shift in US trade policy or the Federal Reserve sends a more hawkish signal, the upward trend of the euro dollar exchange rate may continue in the coming weeks.