The EUR/USD pair remains under pressure below 1.05, as the Federal Reserve’s decision to hold rates steadystrengthens the U.S. dollar. With the European Central Bank (ECB) expected to cut rates by 25 basis points, selling pressure on the euro is increasing. The move aims to support economic recovery amid weak data and trade policy uncertainty, especially if Trump returns to office.
While markets have largely priced in the rate cut, traders will be watching ECB President Christine Lagarde’s remarks for clues on future policy shifts. Sentiment remains cautious as investors gauge the eurozone’s broader economic outlook.
EUR/USD Technical Analysis
The pair is stuck in a tight range, struggling to break above 1.0520 while holding support near 1.0370 ahead of the ECB’s decision.
- Resistance levels: 1.0520, 1.0620, 1.0700, 1.0850
- Support levels: 1.0370, 1.0300, 1.0170
A break above 1.0520 with RSI moving past neutral 50 could spark further gains. However, a drop below 1.0370 and 1.0300 could accelerate losses toward parity at 0.98.
AI Sector Uncertainty and Tech Earnings Impact Nasdaq
The Nasdaq continues its rebound, despite mixed earnings from Microsoft, Meta, and Tesla. However, concerns about DeepSeek AI’s impact on the sector have raised questions about competition and valuations. While AI remains a long-term growth driver, new platforms and increased competition could slow expansion in the near term.
At the same time, the Federal Reserve’s confidence in inflation control and Trump’s economic stance have provided some stability for tech stocks. However, as February approaches, mean reversion trends could lead to more cautious trading behavior.
Nasdaq Technical Analysis
The Nasdaq has recovered from its recent AI-driven volatility, bouncing back from the 20,630 level to trade around 21,500.
- Bullish targets: 21,700, 22,000, 22,130 (all-time high), with potential for 22,800.
- Support levels: 21,000, 20,800, 20,200, 19,600
While the index remains structurally bullish, risks persist. If confidence in tech sector valuations weakens, a sharper pullback could follow, leading to a broader correction.
Market Outlook: Central Bank Decisions and AI Sector Volatility
With the ECB’s rate cut decision and AI-related uncertainty shaping currency and stock markets, traders should remain alert to potential sentiment shifts. The EUR/USD remains vulnerable to downside risks, while the Nasdaq’s recent strength faces resistance from valuation concerns. As markets digest policy moves and tech sector developments, volatility is likely to persist in the coming weeks.
