On Thursday (April 3rd) during the European trading session, the EUR/USD exchange rate broke through the upper band of the Bollinger Bands strongly, with a clear golden cross signal and a short-term upward momentum. The expectation of the Federal Reserve turning "dovish" and the EU's tough response to potential tariff threats have heated up, triggering a shift in market sentiment, and the exchange rate may usher in a new round of upward cycle. However, as the RSI index approaches the overbought area, there is a technical risk of adjustment.

Fundamental analysis

US President Trump has announced that he will implement a 20% tariff on the European Union, which will take effect on April 9th. President of the European Commission von der Leyen slammed Trump's decision to impose tariffs on EU goods and vowed to take countermeasures. The market is concerned that the escalation of global trade frictions and a series of lower than expected US economic data may lead to a sharp slowdown in the US economy, resulting in a comprehensive weakening of the US dollar.

Federal Reserve Governor Kugler stated that the increase in US tariffs may lead to inflation lasting longer than expected. Kugler said that as long as inflation faces these upward risks, she supports keeping current interest rates unchanged. The market focus is now shifting towards the final S&P Global Services PMI and ISM Services PMI in the United States. If these reports show stronger than expected results, it may boost the US dollar and create resistance against the euro/dollar.

Technical analyst interpretation:

From the 120 minute chart analysis, the EUR/USD exchange rate has shown a clear upward trend and has broken through the key resistance level of 1.0954. The K-line chart displays multiple solid bullish lines, reflecting the accumulation of emotions. The MACD indicator DIFF line forms a clear golden cross with the DEA line, and the column volume continues to expand, indicating strong upward momentum.

The Bollinger Bands indicator shows that the exchange rate has broken above the upper limit (1.0944), indicating the establishment of a short-term bullish signal. Meanwhile, the RSI index is at the level of 68.73, which is close to the overbought range but has not yet entered, indicating that there is still room for upward movement. It is worth noting that the exchange rate formed a bottom pattern at the low point of 1.0732, laying the technical foundation for the current rise.

From the daily chart observation, the euro/dollar has completed the correction of the previous decline and is currently challenging the lateral resistance at the 1.10 level; The mid-term trend has shifted from idle to idle, and if this breakthrough can be effectively confirmed, it will indicate a larger level of trend shift. The CCI index rebounded from oversold areas to 107.80, indicating that the medium-term momentum is in a healthy state.

Future prospects

Long outlook: If the euro/dollar can effectively break through and stabilize at the 1.0980 level, it is expected to further explore the 1.10 integer level. This integer threshold is also a psychological key, and breaking it may trigger more technical buying follow-up. In the medium term, if the area above 1.10 can be recaptured, it is expected to challenge the previous high area of 1.12 again. The middle band of the Bollinger Bands (1.0833) has turned upward, providing good downward support.

Short risk: In the short term, if the RSI indicator approaches the overbought area, it may lead to a temporary correction. If the euro cannot break through the 1.10 level, it may fall back to the support level of 1.0870 for confirmation. If the US service industry data is stronger than expected, it may also trigger a rebound in the US dollar, putting pressure on the exchange rate. In addition, the market's assessment of the actual impact of Trump's tariff policies may also affect the exchange rate trend in the medium term.

Overall, the euro/dollar has formed a clear technical breakthrough and is expected to test the 1.10 integer level in the short term. However, market sentiment is volatile, and the subsequent performance of US economic data and the development of trade relations between Europe and America will be key factors affecting the exchange rate trend.

Note: The fundamental content of this article is based on reports from Refinitiv.