EUR/USD Forecast: Euro buyers hesitate after Trump tariff remarks
- EUR/USD retreats below 1.0450 following Monday's volatile action.
- The US Dollar holds its ground following President Trump's remarks on tariffs.
- The technical outlook highlights a loss of bullish momentum in the near term.
After reaching its highest level since early December above 1.0530 on Monday, EUR/USD lost its traction and erased a large portion of its daily gains. The pair came under renewed bearish pressure early Tuesday and retreated below 1.0450 by the beginning of the European session.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.51% | 0.43% | 0.79% | 0.21% | 0.63% | 0.56% | 0.50% | |
| EUR | -0.51% | -0.09% | 0.28% | -0.30% | 0.11% | 0.04% | -0.02% | |
| GBP | -0.43% | 0.09% | 0.41% | -0.21% | 0.17% | 0.12% | 0.07% | |
| JPY | -0.79% | -0.28% | -0.41% | -0.60% | -0.19% | -0.27% | -0.32% | |
| CAD | -0.21% | 0.30% | 0.21% | 0.60% | 0.41% | 0.34% | 0.28% | |
| AUD | -0.63% | -0.11% | -0.17% | 0.19% | -0.41% | -0.07% | -0.12% | |
| NZD | -0.56% | -0.04% | -0.12% | 0.27% | -0.34% | 0.07% | -0.06% | |
| CHF | -0.50% | 0.02% | -0.07% | 0.32% | -0.28% | 0.12% | 0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
The risk-averse market atmosphere helps the US Dollar (USD) stay resilient against its rivals and makes it difficult for EUR/USD to regain its traction.
US Treasury Secretary Scott Bessent said late Monday that he is pushing for universal tariffs on imports to start at 2.5% and rise gradually, per the Financial Times. In response, President Trump told reporters that he wants tariffs “much bigger than 2.5%,” noting that he hasn't yet decided on the level. Additionally, Trump said they are going to be placing tariffs on foreign production of computer chips, semiconductors and pharmaceuticals “in the very near future," to return production of these essential goods to the US.
In the early American session, the US Census Bureau will publish Durable Goods Orders data for December and the Conference Board will release the Consumer Confidence Index data for January. Ahead of the Federal Reserve's (Fed) monetary policy announcements on Wednesday, however, investors are unlikely to take large positions based on these releases. Nevertheless, any fresh headlines regarding the US trade policy could affect the risk mood and drive the USD's valuation in the near term.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart retreated below 50 and EUR/USD closed the last two 4-hour candles below the 20-period Simple Moving Average, pointing to a bearish tilt in the short-term outlook.
EUR/USD was last seen trading slightly below 1.0440 (Fibonacci 61.8% retracement of the latest downtrend). If that level stays intact as resistance, 1.0390-1.0400 (200-period Simple Moving Average, Fibonacci 50% retracement) could be seen as next support before 1.0340-1.0350 (Fibonacci 38.2% retracement, 100-period SMA).
Looking north, a strong resistance could be spotted at 1.0500-1.0510 (round level, Fibonacci 78.6% retracement) ahead of 1.0540 (static level) and 1.0600 (beginning point of the downtrend).
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
