Daily Technical Analysis: EUR/USD Holds Below 1.0900 Ahead of US Retail Sales Data

The EUR/USD pair remains stable around 1.0880, with the US Dollar (USD) holding firm ahead of Monday’s Retail Sales data release. However, the Greenback came under pressure after the University of Michigan (UoM) Consumer Sentiment Index for March fell to 57.9, its lowest level since November 2022, down from 64.7 and below the consensus estimate of 63.1.

Fed Policy & Rate Expectations

Markets widely expect the Federal Reserve (Fed) to maintain its current policy stance when it concludes its two-day meeting on Wednesday. According to the CME FedWatch tool, traders are pricing in a 75% probability of a quarter-point rate cut by June.

Geopolitical Developments & Risk Sentiment

The EUR/USD pair could gain support from improving risk sentiment amid reports of a potential ceasefire discussion between US President Donald Trump and Russian President Vladimir Putin this week. Trump’s envoy, Steve Witkoff, stated on Sunday that he expects the two leaders to speak, adding that Putin “accepts the philosophy”of Trump’s proposed ceasefire and peace terms, according to The Guardian. Last week, the US and Ukraine proposed a 30-day ceasefire to Russia, with Putin reportedly expressing support for the initiative.

Euro Strengthens on German Debt Overhaul

The Euro (EUR) saw gains following reports that Germany had reached an agreement on debt reform and a major increase in state spending. Incoming Chancellor Friedrich Merz secured a deal with the Green and Social Democrat parties on Friday, ahead of a crucial parliamentary vote on Tuesday. If the proposal secures a two-thirds majority, the increased spending plan could provide further support for the Euro.

ECB Officials Weigh in on Global Uncertainty

Meanwhile, ECB Vice President Luis de Guindos warned on Sunday that Trump’s policies are generating greater economic uncertainty than during the COVID-19 crisis, according to Bloomberg. He noted that the new US administration appears less committed to multilateralism, which he described as a major source of instability.

Additionally, ECB Governing Council member and Banque de France Governor François Villeroy de Galhauemphasized the need for the Euro to play a stronger global role. Speaking to La Tribune Dimanche over the weekend, he called for the creation of a «powerful savings and investment union» to attract international investors to the Euro.

EUR/USD Daily Technical Analysis for March 17th:

The first obstacle for the EUR/USD is at 1.0946 (high on March 11, 2025). A break above this level would open the way to 1.0969 (23.6% Fibonacci retracement), with the next target at the psychological level of 1.1000.
On the downside, the first support is provided by the 200-day SMA at 1.0725, followed by the 100-day SMA at 1.0518 and the 55-day SMA at 1.0458. Additional support emerges at 1.0359 (low on February 28), 1.0282 (low on February 10), 1.0209 (low on February 3), and 1.0176 (low on January 13, 2025).

As for the technical indicators, the RSI remains close to 70, signaling a slight correction from overbought levels, while the ADX, around 30, indicates that the upward trend remains strong.

In summary, the EUR/USD is shaping up for further gains, driven by progress in German politics and the persistent volatility of the US dollar. However, the pair remains exposed to trade tensions, geopolitical uncertainty, and central bank decisions—three key factors that will keep traders on edge.