EURUSD strengthens amid Fed’s cautious monetary policy

The EURUSD rate is undergoing a minor correction, with buyers poised to test the 1.0525 resistance level. Find out more in our analysis for 21 February 2025.

EURUSD forecast: key trading points

• The US dollar is under pressure as Donald Trump takes a less aggressive approach to tariffs
• The FOMC meeting minutes confirmed that the Federal Reserve is in no rush to ease monetary policy
• US labour market data showed an increase in initial jobless claims
• EURUSD forecast for 21 February 2025: 1.0545 and 1.0665

Fundamental analysis

The EURUSD rate is rising for the third consecutive week, driven by several factors. The minutes of the last FOMC meeting confirmed the Federal Reserve’s cautious approach to monetary policy. With economic uncertainty remaining, the lack of a clear signal to ease conditions puts pressure on the US dollar.

Investors were also surprised by President Donald Trump’s tariff approach, which turned out to be less aggressive than the markets initially expected.

US labour market data also affected the EURUSD dynamics. Initial jobless claims rose by 5 thousand to 219 thousand, exceeding the average analyst forecast of 215 thousand.

EURUSD technical analysis

The EURUSD rate is in an ascending channel on the H4 chart, with buyers poised to test the key 1.0525 resistance level for the second time. A breakout above it will increase the bullish momentum. The Stochastic Oscillator confirms the likelihood of further growth, and the %K and %D lines are bouncing off the support level. Today’s EURUSD forecast suggests a rise to the 1.0545 and 1.0665 marks. An alternative scenario indicates a breakout below the lower boundary of the bullish channel, with the price consolidating below 1.0395, which could lead to a decline to 1.0305.

Summary

Several factors, including the Federal Reserve’s caution, market disappointment over Donald Trump’s tariff policy, and an increase in initial jobless claims, are exerting pressure on the USD. The EURUSD technical analysis suggests growth to the 1.0545 and 1.0665 levels, while a breakout below the channel’s lower boundary could push the pair down to 1.0305.