EUR/USD outlook shows downside pressure as ECB-Fed divergence weighs on the euro

EUR/USD is trading below its short-term moving averages and faces downward pressure as markets expect the ECB to ease policy before the Federal Reserve, keeping yield differentials in favour of the dollar.

EUR/USD is under pressure after rolling over from recent highs and is trading below its 15-day and 20-day moving averages. These moving averages have flattened and turned lower, signalling weaker technical momentum. The article reports that markets expect the ECB to cut rates ahead of the Federal Reserve, which contributes to downside pressure on the euro via rate and growth differentials. Key facts: - EUR/USD is trading below its 15-day and 20-day moving averages, indicating weakening technical momentum. - The broader multi-month structure remains range-bound, but recent price action suggests downside risks are gaining traction. - Markets expect the ECB to cut rates ahead of the Federal Reserve, reinforcing negative pressure on the euro through yield differentials. - Growth differentials between the eurozone and the United States are described as unfavourable, limiting sustained euro rallies. - The article identifies key risks as a sharp deterioration in U.S. data or an unexpectedly hawkish shift from the ECB. Summary: EUR/USD's technical and fundamental signals have tilted toward downside risk, with recent price action and moving averages showing weakening momentum. Market expectations that the ECB will ease policy ahead of the Federal Reserve and ongoing growth differentials leave yield spreads supportive of the dollar. Next developments cited are U.S. economic data and any unexpectedly hawkish shift from the ECB.