EUR/USD Price Analysis – March 28, 2025
Daily Price Outlook
During Friday's European trading hours, the EUR/USD currency pair dropped to near the 1.0764 level, facing strong bearish pressure as trade tensions between the United States and the European Union (EU) escalated.
This sharp decline in the major currency pair comes ahead of the anticipated announcement by US President Donald Trump on April 2, which will impose reciprocal tariffs.
US Tariff Announcement Weighs on Market Sentiment
The US administration’s decision to impose 25% tariffs on automobile imports is a key driver behind the recent decline in EUR/USD. The tariffs, which will take effect on April 2, are expected to create turmoil in the global auto industry, with major impacts on both the US and European economies.
US imports of cars from Germany, which make up a large part of Germany's car exports, will get more expensive. This will make them less competitive in the global market. The news has caused a drop in the stock prices of car companies, adding to the overall negative market mood.
As a result, US Federal Reserve officials are worried that Trump's tariff plan could lead to higher inflation. Boston Fed President Susan Collins said the tariffs would raise inflation in the short term but could be temporary.
She also pointed out that the Fed should stay flexible with its policies, suggesting that keeping interest rates the same might be a good choice given these economic challenges.
Impact of US Tariff Plans on the Eurozone Economy and Trade Relations
On the other side, as the US tariff plans ramp up, the European Commission (EC) is preparing to impose retaliatory tariffs on US products. This growing trade tension is creating more uncertainty for the Euro. German car manufacturers, who rely heavily on exports to the US, are especially worried.
The proposed tariffs could significantly hurt their ability to compete in the US market, impacting the Eurozone’s overall economic growth.
German Chancellor Olaf Scholz has criticized the US for its protectionist approach, warning that these tariffs would create a lose-lose scenario for both sides.
The European Central Bank (ECB) has also raised concerns about the economic impact of Trump’s trade policies. ECB Vice President Luis de Guindos warned that while the inflationary impact might be temporary, the tariffs could have long-lasting effects on economic growth in the Eurozone.
Slower Inflation Data in France and Spain Offers Temporary Relief for the Euro Amid Trade Concerns
On the economic front, the latest inflation data from France and Spain has shown slower-than-expected price pressures, providing some temporary relief for the Euro. France’s Consumer Price Index (CPI) for March rose by 0.9%, lower than the expected 1.1%.
Similarly, Spain’s Harmonized Index of Consumer Prices (HICP) showed a slowdown in inflation, rising 2.2% compared to 2.9% in the prior period.
However, the softer inflation numbers are unlikely to prevent the continued decline of the Euro, as the broader trade and tariff concerns overshadow the inflation data.
EUR/USD – Technical Analysis
The EUR/USD pair is trading modestly lower at $1.07870, down 0.01% as the euro struggles to regain footing amid mixed technical signals and cautious market sentiment.
Price action remains below the pivot point at $1.08058, indicating a short-term bearish bias while the pair hovers just under the 50-period EMA at $1.07942.
The technical outlook suggests that euro bears are maintaining control for now, as the pair continues to drift within a descending channel on the 4-hour chart.
Immediate support is noted at $1.07656, a level that previously provided a short-term bounce. A sustained break below this could expose deeper support levels at $1.07214 and $1.06790.
On the upside, resistance stands at $1.08544, followed by $1.08841 and $1.09177—key areas that bulls would need to overcome to shift sentiment meaningfully.
Momentum indicators remain subdued, and without a catalyst to propel the euro above its pivot, sellers may continue to dominate.
The Relative Strength Index (RSI) remains neutral, giving neither side a definitive edge, but the broader structure favors downside as long as EUR/USD remains capped below the $1.08058 threshold.
From a tactical standpoint, a short position below $1.08052 may offer a favorable setup, with targets at $1.07406 and a stop placed near $1.08364.
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