The EUR/USD currency pair may experience much more volatility next week than it did this week. The macroeconomic and fundamental backdrop will persist throughout much of the week, making it hard for traders to ignore. Typically, we say that the most important events are expected in the US, and for the past two months, the most significant occurrences have been geopolitical. However, next week, the market may finally pay attention to other events for several reasons.
First, geopolitical factors have recently weakened, allowing the euro to recover much of the losses from February/March. Second, the market cannot trade solely on geopolitical factors forever; currently, about 90% of the geopolitical news flow consists of rumors, demagoguery, conjectures, and assumptions. For example, on Friday, the media reported that Foreign Minister Abbas Araqchi flew to Pakistan for negotiations with the US. By Saturday morning, it became clear that Iran had once again declined to negotiate with Washington. Therefore, reacting to this entire news flow makes little sense. When negotiations occur, it will be possible to assess their results, draw conclusions, and act accordingly.
In the Eurozone next week, there will essentially be only one significant day—Thursday. On that day, the first estimate of the Eurozone's Q1 2026 GDP will be published, along with the consumer price index for April, the unemployment rate, and the ECB meeting featuring a speech by Christine Lagarde. The unemployment rate and GDP for the first quarter will also be published for Germany. What can be expected from these events? Inflation may accelerate from the current 2.6% to 2.9%, quarterly GDP may grow by 0.2%, and year-on-year by 0.8%, while the European Central Bank is likely to keep all three key rates unchanged.
Recently, there have been rumors that the ECB might tighten monetary policy as early as April, but with the ceasefire between Iran and the US in place and Donald Trump extending it indefinitely, representatives of the Monetary Committee have begun hinting at a pause in April. If the conflict slowly but still heads toward resolution and the situation in the Middle East does not deteriorate further, then tightening may not be necessary. Although the latest inflation report indicates that it might be required. However, the ECB wants to wait for a resolution in the relationship between Tehran and Washington before understanding what to expect next: a resumption of war or a freeze on the conflict through prolonged negotiations. Depending on this, the ECB will judge whether to expect further increases in energy prices and a quickening of inflation. New data and forecasts will inform their decisions regarding key interest rates.
Next week will prove interesting, as a resolution may come between the US and Iran, given that Trump is unlikely to wait a couple of years for Iran to be ready for negotiations. Additionally, the Fed meeting and a series of important reports in the US will take place.
The average volatility of the EUR/USD currency pair over the last five trading days as of April 26 is 58 pips, which is considered "average." We expect the pair to trade between 1.1664 and 1.1780 on Monday. The upper channel of the linear regression has turned downward, indicating a bearish trend change. However, the upward trend for 2025 may actually resume. The CCI indicator has entered overbought territory and formed a "bearish" divergence, signaling a downward pullback.
The EUR/USD pair maintains an upward trend amid the weakening influence of geopolitics on market sentiment and a reduction in geopolitical tensions. The global fundamental backdrop for the dollar remains extremely negative, so in the long term, we still expect the pair to grow. If the price is below the moving average, short positions may be considered with targets at 1.1664 and 1.1658 on technical grounds. Above the moving average line, long positions are relevant with targets at 1.1780 and 1.1841. The market is gradually distancing itself from the geopolitical factor, while the dollar loses its only growth driver.
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