EUR/USD rises on dollar weakness, but key technical resistance remains

EUR/USD rebounded for a second day in a row on Tuesday, pushing the pair back towards the 1.1300 mark. Despite a pick-up in bullish momentum in the short term, supporting the single currency, EUR/USD remains well below its recent multi-year highs near 1.1575. The pair has found solid technical support at its key moving averages and overall sentiment remains positive, with traders hoping to continue to find reasons to buy.

European policymakers are currently busy with the G7 meeting, reducing the number of important headlines from key EU decision-makers. Overall market sentiment is completely dependent on trade headlines coming out of the United States, with investors hoping a deal can be reached with the Trump administration to encourage President Trump and his staff to turn the threat of tariffs away from their own economy.

Despite the overall positive mood in global markets, the gradual entry into the unknown is beginning to limit bullish sentiment. The Trump administration is rapidly approaching its self-imposed 90-day deadline for its "reciprocal tariff" proposal. While some potential trade deals have been announced, nothing concrete has happened yet.

Data releases on Wednesday will be limited, with only moderate data available on both sides of the Pacific. US Purchasing Managers' Index (PMI) data on Thursday is expected to show mixed results. The U.S. manufacturing PMI is expected to fall to 50.1 in May from 50.2, while the services sub-index is expected to remain unchanged at 50.8.