EUR/USD dropped below its 200-day Simple Moving Average (SMA) after remarks from Bundesbank President Joachim Nagel hinted at potential rate cuts by the European Central Bank (ECB) before the summer break. However, positive German IFO Business Sentiment data provided some support, briefly lifting the pair from its lows. Despite this, EUR/USD remains under pressure as critical central bank figures prepare to speak.

Nagel’s comments about possible rate cuts, particularly in June, weighed heavily on EUR/USD. Market expectations suggest multiple rate cuts, with the first potentially in June or July. However, Nagel emphasized that any initial cut wouldn’t necessarily lead to further reductions, with decisions being data-dependent.

Despite the downward pressure, EUR/USD slightly recovered after robust German sentiment data was released. The March’s German IFO Business Climate Index surpassed expectations, indicating an improved economic outlook. This temporarily halted EUR/USD’s decline.

CentralCentral bankers’ comments likely drive market sentiment regarding future interest rate decisions. Any deviation from expectations could cause volatility in the currency markets.

From a technical standpoint, EUR/USD is trading near the 200-day SMA and a significant trendline. A break below this trendline could signal further downside towards crucial support levels. However, the lack of solid momentum suggests caution among bears, indicating a potential for a false break.

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