Daily Price Outlook
During the European trading session, the EUR/USD currency pair sustained its upward trend and remained well bid around the 1.0448 level, reaching an intra-day high of 1.0452.
However, the major factor behind this upward trend is largely attributed to investor sentiment, as market participants cautiously await further details on the United States (US) tariff plans.
These plans could have a impact on the Eurozone, and traders are closely monitoring any developments that might create fresh opportunities or risks for the EUR/USD exchange rate.
Despite the recent gains, the outlook for EUR/USD remains uncertain, as geopolitical and economic factors continue to shape its direction.
President Trump’s threats of imposing tariffs on the Eurozone add an element of volatility, while the European Central Bank (ECB) is expected to ease some of its restrictive policies, moving toward a more neutral 2% inflation target.
This could provide some support to the euro. However, with mixed signals coming from both the US and Eurozone economies, the EUR/USD pair's performance will depend on how these factors unfold in the coming days.
EUR/USD Outlook Uncertainty Amid US Tariff Threats and ECB Rate Cuts
On the EUR front, the shared currency has shown a significant recovery in recent days. However, the outlook for EUR/USD remains uncertain due to concerns over US tariffs. President Trump has threatened to impose tariffs on the Eurozone, adding pressure to the currency pair.
In response, European Union (EU) officials have emphasized that instead of retaliating, the EU should focus on improving its competitiveness and developing stronger capital markets. This shift in strategy is meant to better position the region in the face of potential trade tensions.
Meanwhile, ECB President Christine Lagarde spoke at the World Economic Forum, stating that Europe must be ready for any US tariffs. She also mentioned that the tariffs would likely be more selective in nature.
The ongoing trade tension between the EU and US has worsened since Trump’s withdrawal from the Paris Climate Agreement, which had set targets for reducing greenhouse gas emissions. This move has further strained EU-US relations, with the possibility of more economic challenges ahead.
On the monetary policy front, traders expect the European Central Bank (ECB) to cut interest rates by 25 basis points (bps) in each of its next four meetings.
ECB policymaker Yannis Stournaras has suggested that these cuts are necessary to bring inflation closer to the ECB’s 2% target by the end of 2025.
He also warned that US tariffs could speed up these rate cuts in the Eurozone, adding further uncertainty to the market.
Therefore, the news of potential US tariffs on the Eurozone, along with ECB rate cuts and trade tensions, adds uncertainty to the EUR/USD pair. This could lead to increased volatility, with the euro potentially weakening if tariff threats intensify or if rate cuts accelerate.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.04117, down 0.12%, as the currency pair navigates a cautious market environment amid evolving macroeconomic conditions. The price remains slightly above the pivot point at $1.03904, which acts as a critical level for near-term directional bias.
A sustained move above this level could bolster bullish sentiment, targeting immediate resistance at $1.04339, with subsequent levels at $1.04844 and $1.05352. However, failure to break above the resistance zones may limit upside momentum, keeping the pair within a consolidation phase.
On the downside, immediate support is seen at $1.03428, followed by key support at $1.02906 and $1.02388. A break below these levels could invite further selling pressure, potentially driving the pair toward lower support zones and increasing bearish sentiment in the market.
The 50-day EMA, currently at $1.03375, is providing a key dynamic support level, reinforcing the significance of maintaining levels above $1.03910 to sustain a bullish outlook.
From a technical perspective, the pair remains in a neutral to slightly bullish trend, with buyers expected to step in above $1.03910, targeting $1.04636 as a near-term profit objective.
However, downside risks persist, with a stop-loss level at $1.03388 to mitigate potential losses. Traders should watch for upcoming economic releases and market sentiment shifts that could influence price action.
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