EUR/USD Forecast: Euro volatility remains high ahead of key events
- EUR/USD extends correction from multi-month high it touched on Thursday.
- The near-term technical outlook points to a loss of bullish momentum.
- Markets await US employment data and Fed Chairman Powell's speech.
EUR/USD gathered bullish momentum and advanced to its highest level since late September near 1.1150 on Thursday. The pair stages a correction early Friday and trades at around 1.1000.
Euro PRICE This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.55% | -0.47% | -2.28% | -1.22% | 1.21% | 0.42% | -2.79% | |
| EUR | 1.55% | 1.20% | -0.72% | 0.37% | 2.90% | 2.04% | -1.20% | |
| GBP | 0.47% | -1.20% | -1.94% | -0.77% | 1.68% | 0.86% | -2.32% | |
| JPY | 2.28% | 0.72% | 1.94% | 1.09% | 3.63% | 2.80% | -0.59% | |
| CAD | 1.22% | -0.37% | 0.77% | -1.09% | 2.50% | 1.66% | -1.57% | |
| AUD | -1.21% | -2.90% | -1.68% | -3.63% | -2.50% | -0.82% | -3.96% | |
| NZD | -0.42% | -2.04% | -0.86% | -2.80% | -1.66% | 0.82% | -3.18% | |
| CHF | 2.79% | 1.20% | 2.32% | 0.59% | 1.57% | 3.96% | 3.18% |
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).
Growing fears over a stagflation in the US following US President Donald Trump's tariff announcements triggered a US Dollar (USD) selloff on Thursday. The USD Index, which gauges the USD's performance against a basket of six major currencies, lost more than 1.5% on the day.
In the second half of the day, the US Bureau of Labor Statistics will publish the employment report for March. Investors expect Nonfarm Payrolls (NFP) to rise by 135,000 following the 151,000 increase reported in February. A disappointing NFP print at or below 100,000, could cause the USD to continue to weaken heading into the weekend and allow EUR/USD to turn north. On the other hand, a positive surprise, with a NFP reading of 160,000 or higher, could support the USD.
Later in the American session, Federal Reserve Chairman Jerome Powell will deliver a prepared speech on the economic outlook at the annual conference for the Society for Advancing Business Editing and Writing and respond to questions in a panel discussion.
In case Powell voices his concerns over the economic outlook following the tariff decisions, the immediate reaction could cause the USD to weaken. Conversely, the USD could hold its ground if Powell puts more emphasis on the inflation outlook and reiterates their willingness to remain patient with regard to further policy easing. On Thursday, "I am watching for evidence that tariffs are driving a persistent increase in price pressures," Fed board of Governors member Lisa Cook said, adding that she sees more emphasis on upside inflation risks.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart retreated to 60, pointing to a loss of bullish momentum.
In case EUR/USD fails to reclaim 1.1000, technical buyers could be discouraged. In this scenario, 1.0950 (static level) could be seen as next support before 1.0900 (20-period Simple Moving Average) and 1.0855 (100-period Simple Moving Average).
On the upside, first resistance could be spotted at 1.1100 (static level, round level) before 1.1150 (multi-month high set on Thursday).
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.
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.
