EUR/USD Forecast: Euro could struggle to extend recovery
- EUR/USD trades marginally higher on the day above 1.0750.
- US Pres. Trump threatened large scale tariffs on the EU.
- A failure of the 1.0730 support could open the door for another leg lower.
EUR/USD failed to shake off the bearish pressure midweek and registered losses for the sixth consecutive day on Wednesday. After touching its weakest level in two weeks near 1.0730 in the Asian session on Thursday, the pair recovered above 1.0750. The near-term technical outlook, however, suggests that the bearish bias remains intact.
Euro PRICE This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.49% | 0.04% | 0.66% | -0.46% | -0.57% | -0.14% | 0.10% | |
| EUR | -0.49% | -0.55% | -0.36% | -0.90% | -1.07% | -0.59% | -0.34% | |
| GBP | -0.04% | 0.55% | 0.60% | -0.98% | -0.55% | -0.03% | 0.10% | |
| JPY | -0.66% | 0.36% | -0.60% | -1.13% | -1.25% | -0.79% | -0.58% | |
| CAD | 0.46% | 0.90% | 0.98% | 1.13% | -0.05% | 0.32% | 0.56% | |
| AUD | 0.57% | 1.07% | 0.55% | 1.25% | 0.05% | 0.50% | 0.75% | |
| NZD | 0.14% | 0.59% | 0.03% | 0.79% | -0.32% | -0.50% | 0.31% | |
| CHF | -0.10% | 0.34% | -0.10% | 0.58% | -0.56% | -0.75% | -0.31% |
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 US Dollar (USD) preserved its strength on Wednesday as markets adopted a cautious stance, while assessing the latest headlines surrounding US President Donald Trump's trade policies.
Trump announced on Wednesday that they are planning to impose a 25% tariff on all car imports to the US, adding that auto tariffs will be permanent and go into effect on April 2. In a social media post early Thursday, Trump said that they will impose large scale tariffs, "far larger than currently planned," on Canada and the European Union if they do economic harm to the US.
The uncertainty surrounding the US-EU trade relations could cause market participants to refrain from betting on a steady recovery in the Euro.
In the second half of the day, the US economic calendar will feature weekly Initial Jobless Claims. In case there is a significant increase in this data, the USD could come under bearish pressure and help EUR/USD hold its ground.
In the meantime, US stock index futures trade mixed in the European morning. A bearish action in Wall Street's main indexes after the opening bell could support the USD.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 40 and EUR/USD trades below the descending trend line, reflecting a lack of buyer interest. Additionally, the pair closed below the 20-day Simple Moving Average (SMA) for the first time in over three weeks on Wednesday.
On the downside, 1.0730 (200-day SMA) aligns as a critical support level before 1.0630-1.0640 (static level, 200-period SMA). Looking north, immediate resistance is located at 1.0800 (static level, 20-day SMA) ahead of 1.0850 (100-period SMA, static level) and 1.0900 (static level, round level).
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
Premium
You have reached your limit of 3 free articles for this month.
Start your subscription and get access to all our original articles.
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.
