empty
08.05.2025 03:39 AM
EUR/USD Overview – May 8: A First Step Toward De-escalation?

This image is no longer relevant

The EUR/USD currency pair continued to trade sideways for most of Wednesday. There was a minor upward movement, but as a reminder, the pair has now been range-bound for three weeks, and within such a flat range, movements can be completely random. No fundamental or macroeconomic events are needed to fuel price moves within a flat; indeed, there were none on Wednesday. The Eurozone retail sales report was not worth factoring in, as it was weaker than other macroeconomic data that the market has ignored in recent weeks and months.

However, in the ongoing trade battle between China and the U.S., we are beginning to see signs of not so much de-escalation but at least a pause in escalation. A resolution or trade agreement acceptable to both sides still seems far off. Many analysts believe a deal will eventually be signed because there are no other options. We disagree. We believe Donald Trump's ultimate goal is to weaken China economically and militarily. He isn't only using America's own leverage—he's also pressuring U.S. trading partners to choose: trade freely with the U.S. or continue doing business with China.

Most people only know the general story about Trump's demands to 75 countries. Trump has repeatedly said he wants "fairness" in trade, which essentially means reciprocal tariffs. In practice, if a country imposes any import duty on U.S. goods, Trump sees his tariffs as a justified response to the unfair treatment of American products abroad.

But in reality, the U.S. has operated under this global trade system for decades. Why, for example, did Joe Biden or Barack Obama not see this as unjust? The truth is, Trump's actions are targeted solely at China. His goal is clear: shift more wealth to the U.S. and away from China. A similar approach likely applies to the EU, as Trump's harshest accusations are aimed at China and the European bloc. According to the president, both regions have been "stealing from America for years."

This weekend marks the first official meeting between U.S. and Chinese officials in Switzerland. No agreement is expected—nor is there even talk of discussing trade details. Instead, the two sides will discuss conditions to halt further escalation of the trade conflict, which has already essentially frozen trade between the two largest global economies.

This image is no longer relevant

The average volatility of EUR/USD over the last five trading days stands at 81 pips as of May 8, which is classified as "average." We expect movement between 1.1259 and 1.1421 on Thursday. The long-term regression channel points upward, indicating a continued short-term bullish trend. The CCI indicator has entered the overbought zone three times recently, each time followed by only a modest correction.

Nearest Support Levels:

S1 – 1.1230

S2 – 1.1108

S3 – 1.0986

Nearest Resistance Levels:

R1 – 1.1353

R2 – 1.1475

R3 – 1.1597

Trading Recommendations:

The EUR/USD pair has entered a new downward correction within an overall uptrend. For months, we've maintained that a medium-term decline in the euro is our base case, and that view has not changed. The U.S. dollar still has no clear fundamental reasons to weaken, except for Trump. However, this one factor alone could continue to drag the dollar downward, especially as the market ignores other data.

If you're trading based purely on technicals or reacting to Trump's moves, long positions remain relevant above the moving average, targeting 1.1475. If the price is below the moving average, shorts become relevant, with targets at 1.1259 and 1.1230. Remember that the market has been in a total flat range for the past three weeks, and that should be considered in your strategies.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

Paolo Greco,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Stanislav Polyanskiy
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD. The Hottest Week of July: FOMC Meeting, Core PCE Index, Eurozone Inflation, US GDP, and Nonfarm Payrolls

The upcoming week promises to be volatile. The economic calendar is packed with key fundamental events — including Nonfarm Payrolls, the FOMC meeting, eurozone inflation data, the ISM Manufacturing Index

Irina Manzenko 00:48 2025-07-28 UTC+2

Euro Currency – Weekly Preview

There will be few news events in Europe. However, they are not particularly necessary. The U.S. will have a very intense and diverse news cycle. As a result, market participants

Chin Zhao 00:48 2025-07-28 UTC+2

British Pound – Weekly Preview

For the pound, the new week promises to be very uneventful. No important data is expected from the United Kingdom, so all attention will shift to the dollar

Chin Zhao 00:48 2025-07-28 UTC+2

US Dollar – Weekly Preview

Here we are, finally turning to the dollar and the United States. Let's begin with the most important events. First and foremost — the Federal Reserve meeting. Although

Chin Zhao 00:47 2025-07-28 UTC+2

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is attempting to attract buyers. Despite the European Central Bank's decision on Thursday to leave interest rates unchanged, the euro is facing headwinds due to ongoing

Irina Yanina 13:20 2025-07-25 UTC+2

No Unity of Opinion Within the ECB Yet

Yesterday, the European Central Bank kept interest rates unchanged, citing risks stemming from the trade war with the U.S., the strong euro, and rising government spending. According to Governing Council

Jakub Novak 11:59 2025-07-25 UTC+2

ECB Leaves Rates Unchanged

Yesterday, many were watching how the European Central Bank would act under current conditions, as the economy still requires stimulus, but inflationary risks prevent further easing. Following the meeting, President

Jakub Novak 11:36 2025-07-25 UTC+2

The Market Has Chosen a Win-Win Strategy

The U.S. stock market has shaken off its fears completely. The VIX volatility index has plunged to its lowest level since early February, while the S&P

Marek Petkovich 11:15 2025-07-25 UTC+2

Will Trump Succeed in Forcing Powell to Do His Bidding? (Potential for a Bitcoin Decline and a Rise in #NDX)

The U.S. president is fully implementing his aggressive policy toward everyone and everything — both in foreign and domestic affairs. While his actions toward trade partners are more or less

Pati Gani 09:57 2025-07-25 UTC+2

What to Pay Attention to on July 25? A Breakdown of Fundamental Events for Beginners

There are relatively few macroeconomic reports scheduled for Friday, but all of them are quite important. In Germany, the IFO Business Climate Index will be released — the least significant

Paolo Greco 06:43 2025-07-25 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.