EUR/USD Price Forecast: Buyers are back but have not much fuel left
EUR/USD Current price: 1.0417
- Financial markets put trade war concerns temporarily aside, yet fears remain intact.
- The United States ADP report showed the private sector added 183,000 positions in January.
- EUR/USD could extend its near-term advance, but a long-term run seems unlikely.
The EUR/USD pair kept rallying throughout the first half of Wednesday, reaching the 1.0430 region during European trading hours. Concerns about United States (US) President Donald Trump’s tariffs, however, still linger, limiting the bullish potential of the Euro (EUR).
Additionally, the European Hamburg Commercial Bank (HCOB) Services Purchasing Managers’ Indexes (PMIs) suffered downward revisions in January. The German Services PMI was confirmed at 52.5, as previously calculated, yet the European Union (EU) index came down to 51.3 from a preliminary estimate of 51.4. The final EU Composite PMI matched the preliminary estimate of 50.2.
Ahead of Wall Street’s opening, the EU released the December Producer Price Index (PPI), which rose at a monthly pace of 0.4%, as expected. The annual reading printed at 0%, slightly higher than the -0.1% expected and well above the -1.2% posted in November.
Also, the US published the ADP Employment Change report, showing that the private sector added 183,000 new jobs in January, which was better than the 150,000 anticipated by market players and above the 122,000 posted in December.
Later in the American session, the US will release the January ISM Services PMI, foreseen at 54.3, improving from the previous 54.1. The S&P Global Services PMI for the same month is expected to be confirmed at 52.8.
EUR/USD short-term technical outlook
The EUR/USD pair is up for a third consecutive day after plummeting at the beginning of the week, posting higher highs and higher lows, usually a sign of sustained buying pressure. Technical indicators in the daily chart advance within positive levels, in line with the ongoing upward momentum, while the pair finds intraday support in a mildly bullish 20 Simple Moving Average (SMA) currently at around 1.0365. Finally, a firmly bearish 100 SMA stands at 1.0645, while below a bearish 200 SMA, the latter at 1.0760, suggesting additional gains in the long-term run remain limited.
EUR/USD near-term picture supports additional gains. In the 4-hour chart, technical indicators held well above their midlines with uneven strength but still aiming north. At the same time, the pair rallied above all its moving averages, with the 100 SMA advancing above a flat 200 SMA, reflecting the increased bullish potential. Finally, it is worth noting the Momentum indicator stands in overbought territory, somehow suggesting EUR/USD may correct lower in the upcoming sessions.
Support levels: 1.0385 1.0340 1.0300
Resistance levels: 1.0445 1.0490 1.0530
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
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Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
