EUR/USD Forecast: No signs of life in Euro ahead of Powell testimony
- EUR/USD holds steady at around 1.0300 in the European morning on Tuesday.
- Fed Chairman Jerome Powell testify on the semiannual Monetary Policy Report.
- The technical outlook shows that the bearish bias remains unchanged in the near term.
EUR/USD trades in a narrow channel at around 1.0300 after posting small daily losses on Monday. Investors refrain from taking large positions ahead of Federal Reserve (Fed) Chairman Jerome Powell's testimony on the semiannual Monetary Policy Report before the Senate Banking, Housing and Urban Affairs Committee at 15:00 GMT.
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 | 0.23% | 0.42% | 0.43% | 0.29% | -0.09% | 0.22% | 0.27% | |
| EUR | -0.23% | 0.26% | 0.31% | 0.18% | -0.32% | 0.08% | 0.12% | |
| GBP | -0.42% | -0.26% | -0.09% | -0.11% | -0.59% | -0.18% | -0.14% | |
| JPY | -0.43% | -0.31% | 0.09% | -0.16% | -0.44% | -0.20% | -0.13% | |
| CAD | -0.29% | -0.18% | 0.11% | 0.16% | -0.36% | -0.10% | -0.06% | |
| AUD | 0.09% | 0.32% | 0.59% | 0.44% | 0.36% | 0.40% | 0.44% | |
| NZD | -0.22% | -0.08% | 0.18% | 0.20% | 0.10% | -0.40% | 0.04% | |
| CHF | -0.27% | -0.12% | 0.14% | 0.13% | 0.06% | -0.44% | -0.04% |
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).
US President Donald Trump has signed an order to impose a sweeping 25% tariff on all steel and aluminum imports into the US late Monday. Trump also noted that his administration will look into tariffs on automobiles, microchips, and pharmaceuticals next. Over the weekend, Trump has promised to share details on Tuesday or Wednesday on his reciprocal tariff plan.
In a report published on Monday, Goldman Sachs said that the EU could retaliate by imposing tariffs on US technology services rather than goods. As markets await clarity on how the EU-US trade relations evolve, EUR/USD struggles to gain traction.
Powell will deliver a prepared statement and respond to questions from lawmakers on the first day of his testimony. In case Powell reiterates the cautious approach to policy easing, citing the uncertainty surrounding the inflation outlook on Trump tariff policy, the US Dollar (USD) could hold its ground and make it difficult for EUR/USD to stage a rebound. On the flip side, the USD could come under selling pressure and open the door for a leg higher in the pair, if Powell suggests that the changes to the trade policy are unlikely to influence inflation developments in a significant way.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 40, suggesting that sellers look to retain control in the near term.
Looking south, first support area could be spotted at 1.0290-1.0300 (Fibonacci 23.6% retracement of the latest downtrend, round level) before 1.0250 (static level) and 1.0200 (round level, static level). On the upside, resistances aligns at 1.0350-1.0360 (Fibonacci 38.2% retracement, 200-period Simple Moving Average), 1.0400 (Fibonacci 50% retracement) and 1.0440 (Fibonacci 61.8% retracement).
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.
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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.
