EURUSD: SELL 1.1290, SL 1.1310, TP 1.1200 | 02 May 2025

An event to pay attention to today:

15:30 EET. USD - Number of Initial Jobless Claims in the USA

17:00 EET. USD - ISM Manufacturing Index in the USA

EURUSD:

EUR/USD is trading with small losses near 1.1325 in the early Asian session on Thursday under pressure from renewed demand for the US Dollar (USD). Later on Thursday, the focus will be on the US manufacturing purchasing managers' index (PMI) report from ISM. Most markets will be closed on May 1 due to the Labour Day holiday.

Traders have pulled back slightly on bets that the US Federal Reserve (Fed) will cut interest rates by a full percentage point this year, after data showed the US economy contracted 0.3 per cent year-on-year last quarter. However, futures contracts suggest the Fed will begin cutting rates in June, with a total of four quarter-point rate cuts expected, bringing the rate down to the 3.25%-3.50% range by the end of the year.

Data released by the U.S. Commerce Department on Thursday showed that the U.S. economy contracted at an annualised rate of 0.3% in the first quarter of 2025. The figure was weaker than the 0.4 per cent growth expected and below the previous 2.4 per cent.

The report came ahead of the next uncertain steps in US President Donald Trump's trade policy. On Wednesday, Trump said the US economy would ‘take time’ to show the results of current policies and blamed former US President Joe Biden for the stock market's deteriorating performance.

Across the ocean, traders have all but priced in the likelihood of a 25 basis points (bps) rate cut by the European Central Bank (ECB) at its June meeting. ECB officials predict a further slowdown in inflation and economic growth in response to tariffs imposed by the US against its trading partners.

Trading recommendation: SELL 1.1290, SL 1.1310, TP 1.1200

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