EUR/USD Price Forecast: Risk aversion takes over financial markets

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1631

US President Donald Trump threatened fresh tariffs on European countries over Greenland.
The EU confirmed the annual Harmonized Index of Consumer Prices at 1.9% in December.
EUR/USD is neutral in the near term, wider perspective favors the downside.

Risk aversion gripped financial markets at the start of the new week, following United States (US) President Donald Trump’s decision to escalate tensions with Europe. The US Dollar(USD) gapped higher across the FX board, but quickly trimmed gains and trades with modest losses against most major rivals. Spot Gold, however, reached fresh record highs while most global indexes trade in the red.

Over the weekend, US President Trump announced a fresh round of tariffs on eight European countries. The fresh 10% levy will come into place on February 1, targeting Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland, and would be increased to 25% on June 1. According to Trump’s post on social media, such tariffs will continue to escalate until “such time as a Deal is reached for the Complete and Total purchase of Greenland.”

US President Trump claims Denmark is unable to protect the region from China and Russia. He also said that he no longer needs to think “purely of peace” after Norway decided not to give him the Nobel Prize last year. Finally, he added that he did more for NATO than any other person since its founding, and now, “NATO should do something for the United States.”

Other than that, the EU confirmed that the December Harmonized Index of Consumer Prices (HICP) at 1.9% YoY in December, slightly below the previously estimated 2%. The core annualized figure printed at 2.3%, as expected.

US markets will be closed on Monday for Martin Luther King Jr. Day, meaning no data will be released from the country, and Wall Street will remain closed. In such a scenario, fundamental headlines will continue to shape sentiment and, hence, the market’s direction.

EUR/USD short-term technical outlook

The 4-hour chart shows EUR/USD trading around a mildly bearish 20-period Simple Moving Average (SMA), which is below the 100- and 200-period SMAs, suggesting persistent bearish pressure. At the same time, the Relative Strength Index (RSI) ticks higher at around 50, while the Momentum indicator also gains modest upward strength near its midline, indicating near-term buying interest is improving. A break below the daily low at 1.1578 would expose support at 1.1470. The broader bias stays pressured by the declining 100-period SMA and a flat 200-period SMA overhead, which would cap rebounds unless price sustains above those averages.

In the daily chart, EUR/USD retains its downward bias. The 20-day Simple Moving Average (SMA) has turned lower, capping advances at 1.1701, while the 100-day at 1.1664 and the 200-day at 1.1586 provide support, with buyers surging around the latter. Meanwhile, the Momentum indicator edges modestly higher below its midline, signaling selling pressure losing steam. The Relative Strength Index (RSI) sits at 41, recovering from near oversold readings, yet far from signalling another leg north.

(The technical analysis of this story was written with the help of an AI tool.)

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.

AUD/USD keeps range near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies near mid-0.7100s in the Asian session on Friday, stalling the previous day's sharp decline to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of the US consumer inflation figures before placing fresh bets.

USD/JPY holds lower ground toward 154.00; looks to US CPI

USD/JPY holds lower ground toward 154.00 in the Asian session on Friday after hot Japanese PPI data bolster a more hawkish BoJ repricing and provide fresh impetus to the Japanese Yen. However, the downside appears capped as the US Dollar preserves overnight gains ahead of the latest US consumer inflation data.

Gold: Gains remain capped by $4,400

Gold regains composure and trades with decent gains on Friday, managing to refocus attention on the $4,440 mark per ounce troy. Therefore, the precious metal reverses Thursday’s decline as the US Dollar alternates gains with losses at the end of the week.

Ripple Price Forecast: XRP extends decline as returning ETF inflows fail to lift outlook

Ripple (XRP) falls below $1.33 on Friday, marking the third consecutive day of declines. The token continues to track the broader cryptocurrency market downturn, with investors closely monitoring heightened macroeconomic uncertainty ahead of the United States (US) Consumer Price Index (CPI) release and next week’s Federal Reserve (Fed) monetary policy decision.

Weekly focus – The hawks set the tone

Risky assets came under pressure this week as energy prices kept creeping higher and the ECB surprised the markets with a hawkish tone. The price of Brent crude touched USD 110 per barrel on Thursday night, highest since mid-May, as news emerged that the Yemeni Houthis had reached control of key port cities and islands near the Bab el-Mandeb strait.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.