EUR/USD Struggles to Maintain Uptrend Amid Trade Tensions and Weak Eurozone Data

EUR/USD

Prediction: Decrease

The EUR/USD pair experienced significant volatility over the past 24 hours as President Donald Trump unexpectedly delayed tariffs on goods from Canada and Mexico while maintaining a 10% tariff on Chinese imports. This triggered sharp USD fluctuations, pushing EUR/USD from a low of $1.0298 to a high of $1.0350, before retreating to $1.0321.

FUNDAMENTAL ANALYSIS

1. Trump’s Tariff Policy and Its Impact on USD

● Trump’s 30-day tariff suspension on Canada and Mexico boosted CAD and MXN.

● However, the 10% tariff on Chinese goods remains, raising concerns over escalating trade tensions.

● Investors view Trump’s policy as a negotiation tactic rather than strict enforcement, adding uncertainty to USD movements.

2. Implications for Fed’s Monetary Policy

● Rising import costs could fuel inflation, forcing the Fed to maintain higher interest rates for longer.

● J.P. Morgan suggests that policy uncertainty may lead the Fed to hold rates steady before deciding on potential cuts.

● A delay in Fed rate cuts could strengthen the USD, exerting downward pressure on EUR/USD.

3. Market Volatility and Investor Sentiment

● EUR/USD remains volatile due to uncertainties in U.S. trade policy.

● Euro fluctuations reflect concerns about the economic impact of U.S. tariffs on the Eurozone.

● Investors are closely monitoring Trump’s negotiations with Chinese President Xi Jinping for further market direction.

4. Eurozone Economic Data Impact

● Eurozone manufacturing PMI remains in contraction, weighing on the euro.

● ECB is expected to maintain accommodative monetary policy, limiting EUR’s upside potential.

● If Eurozone inflation continues to weaken, the ECB may consider rate cuts, further dampening EUR/USD.

TECHNICAL ANALYSIS

Key Resistance Levels

● 1.03398 – Nearest resistance where the price was recently rejected.

● 1.03749 – Significant resistance level.

● 1.04326 – Strong resistance zone, previously triggering a sharp decline.

Key Support Levels

● 1.02896 – Immediate support; a breakdown below this level could lead to further declines.

● 1.02221 – Major support level where the price recently rebounded.

RSI: Currently at 44.65, below the 50 neutral mark, indicating bearish momentum remains but is not overly strong. There are signs of a mild recovery from oversold levels, but no clear bullish confirmation yet.

EMA Trends: EMA 34 (green) and EMA 89 (yellow) are trending downward, reinforcing the bearish outlook. EMA 200 (dark blue) is above the price, acting as a strong dynamic resistance level.

EUR/USD remains under downward pressure due to trade policy uncertainties, Fed rate expectations, and weak Eurozone data. Unless the Fed signals imminent rate cuts or Eurozone data improves significantly, the pair is likely to maintain its bearish trajectory, with key support levels in focus.

 

 

 

 

 

 

 

 

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