EUR/USD Price Forecast: Buyers on pause, nowhere close to give up
EUR/USD Current price: 1.0845
- Financial markets remain risk-averse amid US President Donald Trump's trade war.
- Negative Chinese inflation in February added to concerns early in Asia.
- EUR/USD consolidates gains near its recent highs, additional gains in the docket.
The EUR/USD pair consolidates its latest gains, holding near the recent multi-month high posted last week at 1.0888. The US Dollar (USD) remains on the back foot despite persistent market concerns about global growth spurring risk aversion.
Most Asian and European markets trade in the red, with fears exacerbated by negative Chinese inflation. The Consumer Price Index (CPI) contracted 0.2% MoM in February, its lowest in over a year. The annualized CPI posted -0.7% in the same month, down from the 0.5% posted in January. Even further, the Producer Price Index (PPI) shrank by 2.2% YoY in February, slightly better than the previous -2.3% but missing the 2.1% expected.
Meanwhile, the Eurozone (EU) published the March Sentix Investor Confidence report, which resulted at -2.9, improving from the previous -12.7. German Industrial Production rose 2% MoM in January and slid 1.6% from a year earlier.
The United States (US) macroeconomic calendar has little to offer, with the focus on US President Donald Trump's trade war developments.
EUR/USD short-term technical outlook
The EUR/USD pair trades with a positive tone but within Friday’s range. Technical readings in the daily chart show the risk skews to the upside, with the pair developing above all its moving averages. A bullish 20 Simple Moving Average (SMA) crosses above a flat 100 SMA, both around the 1.0500 level, while a directionless 200 SMA stands at around 1.0725. The same chart shows technical indicators keep heading higher despite overbought conditions.
The near-term picture shows the risk remains skewed to the upside. The 4-hour chart shows a bullish 20 SMA provides intraday support at 1.0805, also the intraday low. Technical indicators have corrected extreme overbought conditions and turned flat, reflecting the ongoing consolidative phase while maintaining the risk skewed to the upside.
Support levels: 1.0805 1.0780 1.0735
Resistance levels: 1.0890 1.0925 1.0960
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
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.
