Daily Price Outlook
During the European trading session on Wednesday, the EUR/USD currency pair moved higher, reaching close to 1.0380 ahead of the US Consumer Price Index (CPI) data for January, set to be released at 13:30 GMT.
The Euro (EUR) continued to perform well, strengthening against most other major currencies. This rise came despite growing concerns about a potential trade war between the US and the Eurozone.
At the same time, tensions between the US and the European Union (EU) were rising. European Commission President Ursula von der Leyen warned that the EU would not stand by if President Donald Trump’s administration went ahead with imposing 25% tariffs on steel and aluminum imports.
EUR/USD Holds Firm Amid Trade War Concerns and ECB Rate Cut Expectations
On the EUR front, the shared currency has managed to hold its ground and continues to perform well against major peers, even as concerns over a trade war between the US and the Eurozone grow.
European Commission President Ursula von der Leyen warned that the EU would not stay silent if the US imposes 25% tariffs on steel and aluminum imports.
She made it clear that the EU is prepared to take action to protect its economic interests and could introduce countermeasures in response. This growing tension has added uncertainty to the market, but the Euro remains steady, keeping EUR/USD firm.
Former US President Donald Trump has already signed executive orders enforcing 25% tariffs on steel and aluminum imports without any exemptions, aiming to boost local production. He is also considering imposing similar tariffs on other countries he believes engage in unfair trade practices.
Market participants worry that the Eurozone could face additional pressure from reciprocal tariffs. Currently, the EU imposes a 10% tariff on US automobile imports, while US domestic cars entering the EU face a lower 2.5% import duty. These trade conflicts could weigh on EUR/USD movements in the coming days.
Meanwhile, the European Central Bank (ECB) is expected to announce more interest rate cuts this year, as inflation remains below its 2% target. ECB policymaker and Bank of France head Francois Villeroy de Galhau has warned that Trump’s trade policies could harm the economy in the long run.
Investors are also awaiting the European Commission’s economic growth forecasts, which will be released on Thursday and could influence EUR/USD trading.
EUR/USD – Technical Analysis
EUR/USD is hovering around $1.03581, showing slight weakness as the U.S. dollar maintains its strength. The pair has slipped below its pivot point at $1.03670, reinforcing a short-term bearish bias.
Persistent concerns over Federal Reserve policy tightening and resilient U.S. economic data have kept pressure on the euro, limiting its upside potential.
On the technical side, the 50-day EMA at $1.03465 is acting as a dynamic support level. Immediate resistance stands at $1.04093, with a breakout above this level potentially opening the door to further gains toward $1.04497 and $1.04922. However, the current trend suggests that buyers remain cautious amid macroeconomic uncertainty.
Downside risks are evident, with $1.02997 serving as the first major support level. A sustained break below this level could accelerate losses toward $1.02551, followed by a deeper decline toward $1.02135.
Given the technical setup, traders may look for sell positions below $1.03674, targeting $1.03007, while maintaining a stop loss at $1.04115.
Looking ahead, market participants will be closely watching U.S. inflation data and any Federal Reserve commentary for signals on future rate policy.
A softer inflation reading could weaken the dollar and support the euro, while persistent inflationary pressures may reinforce the Fed’s hawkish stance, keeping EUR/USD under pressure.
Related News
- GBP/USD Price Analysis – Feb 12, 2025
JOIN LHFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.