EUR/USD Bulls Under Pressure: How Trade Tensions and Bond Yields Impact the Pair

Market Overview

United States

The U.S. market recorded a recovery as softer inflation data brought renewed hope to investors. The S&P 500 rose 0.5%, and the Nasdaq gained 1.2%, led by major tech stocks. However, escalating trade tensions with President Trump's new tariffs kept Treasury yields elevated. February’s lower-than-expected inflation data provided temporary relief to investors, though concerns about rising prices 
remain.

The U.S. dollar held steady around 103.5 points as Trump's unpredictable trade policies fueled recession fears. Rising bond yields supported the greenback, while gold hovered near record highs and crude oil stabilized  after a prior 2% increase.

United Kingdom

The UK market saw the British pound (GBP) maintain its upward momentum, trading around $1.2968 after hitting a four-month high at $1.2990. Softer-than-expected U.S. inflation data helped the pound sustain its upward trend. The GBP remained above key support at 1.2922 and the 100-hour moving average, reinforcing investor optimism.

The FTSE 100 index rose 0.4% despite escalating global trade tensions following the EU’s announcement of retaliatory tariffs on U.S. goods. The pound’s stability and positive sentiment in the stock market helped bolster investor confidence in the UK.

BTCUSD 
 
Prediction: Recovery within the primary downtrend 

Bitcoin remains in a general downtrend, with lower highs and lower lows in recent times. Currently, the price is recovering after hitting the recent bottom at $76,820. Although BTC has rebounded above the $80,000 zone, the recovery momentum is facing strong resistance at the $84,000 - $85,000 range. Trading volume has declined in recent weeks, indicating that the recovery lacks strong momentum and confirmation from capital inflows. 

FUNDAMENTAL ANALYSIS 

Monetary policy and the Fed's impact 

The latest U.S. CPI data was reported at 3.1%, lower than the forecasted 3.2%, indicating that inflation is cooling. This increases the likelihood that the Federal Reserve (Fed) may soon cut interest rates. 

According to market forecasts, the probability of a Fed rate cut in May has risen to 31.4%, three times higher than the previous month. Additionally, expectations for 3-4 rate cuts this year have significantly increased. 

Despite positive inflation data, Fed Chair Jerome Powell and Governor Christopher Waller have emphasized that the Fed will not rush to ease monetary policy until more clear economic data emerges. 

Inflation and market momentum 

Although cooling CPI data supports market sentiment, BTC has yet to break above the $84,000 mark, reflecting investors' cautious mindset amid a lack of momentum in risk asset markets. 

The cryptocurrency market has seen its capitalization drop nearly 25% since early February 2025, with over $900 billion in market value wiped out amid concerns about a potential U.S. economic recession and escalating global trade tensions. 

Data from CoinGecko shows that crypto trading volume has sharply decreased by 63%, from a peak of $440 billion in February to just $163 billion on March 12.
 
According to Santiment's analysis, the decline in trading volume even as prices recover is a sign of weak investor sentiment. This caution may limit the sustainability of the current recovery. 

Geopolitical factors and market sentiment 

Recent import tariff hikes on Chinese goods announced by President Trump may increase the risk of a global economic downturn, adding negative pressure on risk assets like Bitcoin. 

At the same time, investors are closely watching Trump's administration, as speculations arise that he may be intentionally creating market pressure to force the Fed into faster rate cuts. This could lead to significant volatility in the coming period. 

Despite these concerns, some experts like Arthur Hayes (co-founder of BitMEX) believe Bitcoin's long-term bullish trend remains intact. He emphasized that the nearly 30% correction from the peak is still within normal ranges in a bull market. 

TECHNICAL ANALYSIS 

Key Resistance Levels 

●    $84,000: The nearest resistance zone, aligning with the 50% Fibonacci retracement from the $91,060 peak to the $76,820 low. 

●    $85,000 - $85,650: The next strong resistance zone; breaking above this level could open the door for a recovery toward $86,500 and potentially $88,000. 

●    $88,756: A significant resistance level near the 200 EMA, where strong selling pressure is likely if the price reaches this area.
 
Key Support Levels 

●    $82,000: The current critical support zone, aligning with the short-term uptrend line on the 1-hour chart. Breaking below this level may push the price lower. 

●    $80,000: A strong support area that has acted as the bottom in the recent recovery. 

●    $78,000 - $76,600: A solid support zone in the event of a deeper correction. 

Technical Indicators: 

Trading volume has dropped significantly in recent weeks, signaling investor caution. BTC’s recovery momentum may be unsustainable unless volume picks up. 

The RSI is currently at 53.15, indicating a neutral market state. Previously, the RSI rebounded from oversold territory below 30, confirming that selling pressure is weakening and suggesting a potential short-term recovery.
 
Bitcoin is currently experiencing a short-term recovery but remains within its primary downtrend. The decline in trading volume is concerning, signaling weak market sentiment and the possibility of an unsustainable recovery. Economic data from the Fed and ongoing global trade tensions will play a crucial role in shaping Bitcoin’s price direction in the near future. 

XAUUSD 
 
Prediction: Bullish 

Gold continues its strong uptrend, currently trading around $2,944 after breaking the key resistance level at $2,929. This upward momentum is driven by increased safe-haven demand amid escalating trade tensions and lower-than-expected U.S. inflation data. 

Gold is now approaching its all-time high of $2,956.505, with a high likelihood of retesting this level soon. However, profit-taking pressure or impactful economic data could trigger a pullback. 

FUNDAMENTAL ANALYSIS 

Monetary Policy and Fed's Impact 

The latest U.S. CPI report indicated lower-than-expected inflation, giving the Fed more room to cut interest rates in the near future. The market currently anticipates at least two rate cuts in 2025, which is providing further support for gold prices. 

The 10-year U.S. Treasury yield is currently at 4.303%, slightly higher but still below recent peaks. This relieves some pressure on the USD, further boosting gold’s appeal. 

Inflation and Market Drivers 

U.S. CPI for February increased by 2.8%, below the forecasted 2.9%, while Core CPI rose 3.1%, under the expected 3.2%. This cooling inflation has strengthened expectations of a more dovish Fed stance. 

However, the U.S.'s decision to impose 25% tariffs on steel and aluminum imports, along with plans for additional tariffs on EU and Canadian goods, may increase inflationary pressure in the coming months. 

Geopolitical Factors and Market Sentiment 

The rising risk of a global trade war is heightening market concerns. New retaliatory measures announced by the EU and Canada have intensified these tensions. 

Financial markets are also facing uncertainty as President Trump continues to shift his stance on trade policies, prompting investors to adopt a cautious outlook and favor safe-haven assets like gold. 

Moreover, concerns about a U.S. economic slowdown are weighing on sentiment. The latest U.S. 

jobless claims data showed 226K, exceeding the forecasted 221K, raising concerns about a potential weakening in the labor market. 

TECHNICAL ANALYSIS 

Key Resistance Levels 

●    $2,956.505: The all-time high and strongest current resistance. A breakout above this level could target $2,970 and beyond. 

●    $2,929.035: Recently breached and likely to become a new support zone. 

Key Support Levels 

●    $2,906.715: The nearest support level, aligning with the 89 EMA. A successful retest of this level could confirm the continuation of the bullish trend. 

●    $2,883.246: A stronger support zone. 

●    $2,858.874: A major support area critical for maintaining the medium-term uptrend. 

Technical Indicators: 

RSI: Currently at 66.19, indicating the market is not yet overbought, leaving room for further upside. However, if RSI reaches 70 or higher, a short-term correction may occur. 

Trading Volume: Remains high, reflecting strong buying momentum. 

Gold’s bullish momentum remains intact, with potential to test its all-time high at $2,956.505 in the near term. However, investors should remain cautious of possible pullbacks driven by profit-taking or impactful economic data. Key events such as the upcoming U.S. PPI report and updates on President Trump's trade policies will be crucial for guiding gold’s next move. 

EUR/USD 
 
Prediction: Bullish (With signs of short-term correction) 

The EUR/USD pair remains in a strong uptrend recently, characterized by higher highs and higher lows. After reaching a recent peak at 1.09469, the pair has shown signs of a slight pullback and is currently trading around 1.0889. The recovery of the USD, supported by rising bond yields, is putting pressure on EUR/USD, yet the bullish structure remains intact. Traders should watch key support zones to assess the pair's potential to continue its upward trend. 

FUNDAMENTAL ANALYSIS 

Monetary Policy and Fed's Impact 

The 10-year U.S. Treasury yield has climbed to 4.3047%, near its highest level in a week, while the 2-year yield holds firm at 3.9866%. This increase has allowed the USD to recover slightly after its previous sharp decline, contributing to short-term correction pressure on EUR/USD. 

U.S. February CPI data rose by 0.2%, lower than the expected 0.3%, temporarily boosting market optimism as inflationary pressures appeared to ease. However, experts warn that this CPI figure may not yet fully reflect the impact of new tariff measures recently announced by President Trump. As a result, inflation risks in the coming months remain elevated. 

Trade Tensions and Market Sentiment 

President Donald Trump has once again threatened to impose new tariffs on EU goods following the EU’s recent announcement of retaliatory measures against previous U.S. tariffs. This escalating trade conflict has heightened concerns about slowing global economic growth, especially as both the U.S. and Europe face mounting economic risks. 

Although the EUR recently climbed to a 5-month high at 1.0947, driven by optimism over a potential Russia-Ukraine ceasefire, profit-taking pressure combined with the USD’s recovery has led EUR/USD to pull back. 

Political Developments and Market Impact 

The Bank of Canada (BoC) recently cut interest rates by 25 basis points, lowering its benchmark rate to 2.75%, which has pressured the CAD downward. 

JP Morgan has advised taking short positions on USD/JPY, anticipating a recovery in the JPY amid escalating trade risks.  Markets are closely monitoring developments regarding the Russia-Ukraine conflict and U.S. tariff policies, both of which could significantly impact EUR/USD's movement in the near future. 

TECHNICAL ANALYSIS 

Key Resistance Levels 

●    1.09469: The recent peak; a breakout above this level could target 1.10080. 

●    1.10080: A key psychological resistance level. 

Key Support Levels 

●    1.08747: The nearest support; breaking below this level may signal a deeper correction. 

●    1.08145: A stronger support zone. 

●    1.07207: A key support area in the event of a deeper retracement. 

Technical Indicators: 

RSI: Currently at 59.01, down from overbought territory, indicating weakening bullish momentum but no clear reversal signal yet. 

EUR/USD remains in an uptrend but faces short-term correction pressure as the USD recovers on rising bond yields. Traders should closely monitor key support levels like 1.08747 and 1.08145 for safer entry points. Ongoing risks from trade tensions and Trump’s unpredictable economic policies may trigger heightened volatility in the near term. 

 

 

 

 

 

 

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