Daily Price Outlook
During Monday’s European session, the EUR/USD currency pair struggled to extend its gains, remaining under pressure near the 1.0481 level.
Despite the initial upside push, the pair could not break through the psychological resistance at 1.0500, as investors weighed several factors, including trade tensions and economic data.
The Eurozone is currently facing the threat of tariffs imposed by US President Donald Trump on imported cars, with plans to announce them around April 2. These tariffs are expected to hit Germany, Japan, and South Korea, leading exporters of vehicles to the US.
Although European Central Bank (ECB) policymaker Fabio Panetta downplayed the potential inflationary impact of these tariffs on the Eurozone, citing a limited or slightly negative effect, the uncertainty remains a concern for traders.
Panetta suggested that any weakening of the Euro, potentially driven by higher US tariffs and retaliation from Europe, would likely be counteracted by a global economic slowdown.
Moreover, the dovish monetary policy outlook from the ECB, with inflation falling below the 2% target as a primary concern, continues to keep the Euro under pressure.
US Dollar Faces Mixed Sentiment Amid Weak Retail Sales Data
On the US front, the US Dollar has shown some signs of weakness, trading near a two-month low, as market sentiment was affected by a poor retail sales report for January.
The US Dollar Index (DXY), which tracks the performance of the Greenback against a basket of six major currencies, slipped below 107.00, with a sharp sell-off following the release of the disappointing retail sales data. The data revealed a faster-than-expected decline of 0.9%, compared to an anticipated contraction of only 0.1%.
Despite these weak data points, the US Dollar’s outlook is not entirely bearish. The Federal Reserve’s hawkish stance remains a limiting factor for any significant declines in the USD. With speeches from several Federal Reserve officials this week, markets will look for guidance on the central bank’s monetary policy direction.
Looking forward, all eyes will be on the preliminary S&P Global Purchasing Managers Index (PMI) data for February, which could offer fresh insights into the US economy’s performance. Moreover, the ongoing geopolitical and economic developments surrounding tariffs and the ECB's stance on interest rates will continue to shape the EUR/USD outlook.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.04929, holding just above the pivot point at $1.04832, signaling a potential continuation of its modest bullish momentum. The immediate resistance stands at $1.05205, with a breakout above this level opening the door to $1.05563 and $1.05920.
On the downside, immediate support is found at $1.04453, followed by deeper support levels at $1.03920 and $1.03519. A failure to hold above $1.04453 could shift sentiment toward the bearish side, potentially leading to further losses.
The 50-day EMA at $1.04138 is currently acting as dynamic support, reinforcing the case for further upside if EUR/USD remains above this level. A buying opportunity is present above $1.04838, with a target set at $1.05406 and a stop-loss at $1.04457.
The short-term trend remains cautiously bullish, but traders should watch for a break above $1.05205, as this could accelerate gains toward the next key resistance levels.
Conversely, a drop below the pivot point of $1.04832 could expose the pair to renewed selling pressure, particularly if upcoming economic data or central bank commentary shifts investor sentiment.
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