28 July 2025,04:09
Daily Market Analysis
28 July 2025, 04:09
Key Takeaways:
*Trade-resolution tailwinds continue to support the euro while easing global risk aversion.
*The ECB’s cautious pause and neutral messaging strike a careful balance amid resilient inflation data and external uncertainties.
*The ECB must monitor export dynamics closely, especially given the euro’s surge and the risk of policymakers losing control over price stability.
The euro extended its gains, trading near $1.176–1.178, as markets welcomed the recent U.S.–EU trade agreement, which halved the threat of steep tariffs and delivered clarity to risk sentiment. The pact, set to take effect on August 1, caps tariffs at 15% on most EU exports and includes ambitious EU commitments—$750 billion in U.S. energy purchases and $600 billion in investment, including military procurement. Both President Trump and European Commission President von der Leyen described the deal as a milestone for stability and predictability in transatlantic trade relations
From a monetary policy perspective, the European Central Bank (ECB) has adopted a “wait-and-see” pause after its eighth 25-bp rate cut, holding its deposit rate steady at 2.0%. President Christine Lagarde flagged the current episode as one of “exceptional uncertainty” notably due to trade tensions and did not commit to further cuts. ECB board member Isabel Schnabel underscored that inflation and growth remain sufficiently stable, placing the bar high for additional easing amid steady real activity. While ECB officials have refrained from signaling near-term easing, the eurozone remains vulnerable to economic stagnation, with Q2 GDP growth likely to decelerate and July CPI risks skewed to the upside. Nonetheless, the euro continues to benefit from the Fed’s dovish tilt and broad-based dollar softness.
Nevertheless, the eurozone economy faces structural headwinds. Growth projections for 2025 hover around 0.9%, a deceleration attributed in part to trade uncertainty and export softening, even as government defence and infrastructure spending provide counterbalance. Inflation is expected to average near 2.0% in 2025 before gradually moderating. Tariff-induced inflation and lingering euro strength complicate the ECB’s policy path.
Technical Analysis
EURUSD, H4:
The EUR/USD pair continued to trade resiliently after rebounding sharply from the 1.1610 support zone, climbing above the 20- and 50-period SMAs on the chart. However, the upward momentum has begun to ease, with price consolidating just below the critical 1.1775 resistance zone. A decisive break above this area could pave the way for a move toward 1.1880 and beyond, while a failure to do so may trigger a corrective pullback toward 1.1720 support level.
From a technical perspective, the Relative Strength Index (RSI) remains above the 50 midline, signaling that the broader bullish structure is intact, but it has started to retreat from recent highs, reflecting waning upward momentum. Similarly, the MACD remains in positive territory, though its histogram is narrowing, and the lines on the verge of a potential bearish crossover shows an early warning sign that the pair’s short-term upside drive may be fading.
Overall, the EUR/USD pair’s bias remains cautiously bullish above 1.1747, but traders should watch for a clear breakout above 1.1810 or a failure to hold support for confirmation of the next directional move.
Resistance Levels: 1.1775, 1.1810
Support Levels: 1.1720, 1.1660
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