EUR/USD tumbles to daily lows near 1.1270 on tariffs concerns
|- The pair drops to 1.1280/70 band, fresh session lows.
- Threats of US tariffs on EU cars weigh on spot.
- Economic Sentiment in Germany, EMU remains depressed.
The selling pressure around the shared currency has now intensified and is forcing EUR/USD to recede to the 1.1280/70 band, or fresh weekly lows.
EUR/USD weaker on tariffs rumours
The pair comes under renewed and strong selling pressure following a sharp rebound in the demand for the greenback, which lifted the US Dollar Index (DXY) back above the key 97.00 the figure.
In fact, the Trump administration could impose tariffs on US imports of EU cars and auto-parts, mostly affecting – at least initially- German carmakers. In fact, according to the think tank IFO, a 25% tariffs could trigger around 50% drop in German exports to the US.
Earlier in the session, Economic Sentiment in Germany and the broader euro area improved a tad for the current month as per the latest ZEW Survey, although they still remain in depressed levels.
What to look for around EUR
US-China trade talks will be in centre stage this week and are expected to drive the sentiment in the risk-associated complex. Following recent progress in earlier talks, market participants are now looking at the possibility that both parties could clinch a deal sooner than later. Still on the trade front, EUR is expected to face renewed winds from the likeliness of tariffs on US imports of EU cars. On another direction, EUR should closely follow comments from ECB members regarding the ongoing slowdown in the euro bloc and potential guidance from the ECB in the next months, at a time when speculations that the central bank could refrain from acting on rates this year remain on the rise.
EUR/USD levels to watch
At the moment, the pair is losing 0.26% at 1.1279 and a break below 1.1234 (2019 low Feb.15) would target 1.1215 (2018 low Nov.12) en route to 1.1118 (monthly low Jun.20 2017). On the upside, the next hurdle is located at 1.1339 (high Feb.18) seconded by 1.1356 (23.6% Fibo of the September-November drop) and then 1.1399 (100-day SMA).
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