EUR/USD: Corrective pullback underway – OCBC

Euro (EUR) continued to ease lower after hitting a more than 3Y high of 1.1570s. EUR was last at 1.1350 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Risks skewed to the downside

"De-escalation in tariff angst is helping stretched market moves to normalise. To add, ECB officials turned more dovish. ECB’s Rehn said that the ECB should keep lowering interest rates at its next meeting in June if forecasts show Eurozone inflation falling below the ECB’s 2% target. He also said that the ECB should not rule out larger interest rate cuts."

"ECB Chief Economist Lane said that there is no reason to say that a 25bp move is always the default, although he would not pre-commit to any rate path. Separately, the ECB is considering to change its monetary policy strategy to enable more nimble responses to price shocks as the global environment becomes increasingly volatile. This will be discussed at an informal retreat on 6-7 May in Portugal."

"Bullish momentum on daily chart is fading while RSI fell. Risks skewed to the downside. Support at 1.1290 before 1.1235 (23.6% fibo retracement of 2025 low to high) and 1.1160 (21 DMA). Resistance at 1.1410, 1.1570 (recent high)."