EUR/USD Price Analysis – March 21, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair failed to stop its downward trend and remained well offered around 1.0820. The pair faced pressure due to a stronger US Dollar (USD) and rising concerns over trade tensions.
The US Dollar Index (DXY) climbed to around 104.15 as the Federal Reserve (Fed) maintained its restrictive stance on interest rates.
This dampened expectations of any near-term rate cuts, further supporting the USD and weighing on the euro. As a result, EUR/USD struggled to find demand and continued its bearish trajectory.
Fed’s Tight Policy and Economic Uncertainty Weigh on EUR/USD
On the US front, the Federal Reserve kept interest rates unchanged for the second time in a row, maintaining them within the 4.25%-4.50% range.
Fed Chair Jerome Powell indicated that there was no rush to cut rates, pointing to significant uncertainty in the US economic outlook.
His comments reinforced expectations that monetary policy would remain tight for an extended period, boosting the US Dollar and putting pressure on the EUR/USD pair.
Furthermore, Powell cautioned that new policies under US President Donald Trump could slow economic growth and push inflation higher.
This has led market participants to anticipate potential policy changes that could impact global trade and inflation trends, adding to concerns in the financial markets.
The Fed’s tight policy stance and Powell’s warnings strengthened the US Dollar, making the euro less attractive. As a result, EUR/USD faced downward pressure, struggling to gain momentum amid economic uncertainty.
Euro Weakens Amid Concerns Over US Tariffs and Trade War Risks
On the other hand, the shared currency dropped further as investors reacted to concerns over Trump’s proposed reciprocal tariffs, which are set for discussion on April 2.
Market speculation suggests these tariffs could disrupt global supply chains, leading to higher inflation and slower economic growth.
ECB President Christine Lagarde warned that a trade war with the US could hurt economic growth, even if its impact on inflation is temporary.
Investors are worried about Germany, a major exporter to the US, as Trump has threatened a 25% tariff on foreign cars.
Currently, the US charges only 2.5% on German cars, while the Eurozone imposes a 10% tax on US cars. These concerns have weakened the euro, keeping it under pressure against the stronger US Dollar.
Economic Developments and Market Outlook
On the economic front, investors are closely watching the upcoming US S&P Global Purchasing Managers Index (PMI) data for March, due on Monday, In Europe, the German government has approved a 500-billion-euro infrastructure fund to boost economic resilience, with support from both the Conservatives and the Social Democratic Party (SPD). This move is aimed at protecting the economy amid concerns over a potential trade war.
For the EUR/USD pair, the focus remains on the US economic data and how it may impact the US Dollar, while Europe's efforts to stabilize its economy could help support the euro.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.08355, showing minimal movement as traders assess market conditions. The pair has been struggling to gain momentum, hovering below the 50-day EMA at $1.08972, which continues to act as dynamic resistance.
The pivot point at $1.08553 serves as an inflection level for today’s session, indicating that bearish momentum may persist if the pair remains below this threshold.
Immediate resistance is located at $1.08838, with further hurdles at $1.09177 and $1.09516. A break above these levels could trigger fresh buying interest, but current sentiment remains cautious due to renewed strength in the U.S. dollar, supported by a hawkish Federal Reserve stance.
On the downside, immediate support rests at $1.08152, followed by $1.07895 and $1.07656. A sustained move below $1.08553 would confirm a bearish bias, pushing the pair toward these lower levels.
If sellers maintain control, EUR/USD could face extended downside pressure, with the 50-day EMA reinforcing resistance around $1.08972.
Traders should monitor $1.08544 as a key level, with selling opportunities below this price targeting $1.08152, while upside breakouts remain capped near $1.08838.
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