- For three consecutive trading sessions, the EUR/USD pair has been moving in a corrective upward trend.
- Moreover, its gains have not exceeded the level of 1.0457, the highest in nearly a month.
- Meanwhile, this was before the EUR/USD price stabilized around the 1.0415 level at the time of writing the analysis.
- Currently, Bulls are waiting for increased confidence in the euro to take advantage of the opportunity to change the bearish general outlook for the EUR/USD.
US tariffs continue to trouble the Euro
According to Forex trading platforms, the EUR/USD currency pair rose after US President Donald Trump indicated that there is room for negotiation on tariffs, reducing the likelihood of a decline to parity. According to licensed trading platforms, the Euro to Dollar exchange rate (EURUSD) reached its highest level since December in mid-week trading as traders expressed relief that the worst-case scenarios of tariffs seemed increasingly unlikely.
Overall, it is certain that the European Union will face higher tariffs under Trump, but expectations are that there is ample room for EU leaders to mitigate the blow. As Trump stated after his inauguration, “We have a $350 billion deficit with the European Union. They treat us very badly, so they will have to impose tariffs.”
However, he indicated a day earlier that a possible way forward would involve the EU buying more American oil and gas, which would reduce the trade deficit. In short, negotiations lie ahead, and Trump is using the threat of maximum tariffs as a bargaining chip.
Trading Tips:
Dear TradersUp follower, the euro against the dollar records its best monthly performance amid tariff relief. Moreover, those gains could collapse quickly, so be careful and do not take risks.
Stoxx 600 European index closes at all-time high
According to stock trading platforms, European stock indices closed strongly yesterday, continuing their strong momentum this week, supported by strong corporate earnings as financial markets continued to assess the outlook for borrowing costs from the European Central Bank and the impact that Trump’s potential trade barriers could have on European corporate returns.
The euro zone’s Stoxx 50 index rose 0.8% to close at 5,206, its highest level since 2000, while the Stoxx 600 index rose 0.4% to extend its record high to 528. Adidas shares led the gains, rising 6% after reporting strong revenue and profit growth in the fourth quarter, prompting JP Morgan, BNP Paribas, Exyn and Oddo to raise their recommendations.
In addition, tech giants gained from major new investment projects in artificial intelligence in the US, sending ASML up more than 2% each. In turn, US President Trump said that the European Union is “ready for tariffs” and mentioned a 10% tax on Chinese imports, which could come into effect as early as February 1.
EUR/USD Technical Analysis Today:
Dear reader, according to the daily chart trading, the recent gains of the EUR/USD currency pair are still limited and have not yet led the pair to a change in the overall upward trend according to the performance on the daily chart above, and the first break of the overall trend will only occur with stabilization above the resistance of 1.0540. Furthermore, we still prefer selling the Euro/Dollar from every upward level, but without risk according to this timeframe. Also, a move below the 1.0300 level will threaten the current change and at the same time strengthen the expectation that the Euro/Dollar price will move towards parity.
Keep in mind that excessive long positions in the US dollar indicate that there is room for declines in the near term, and the euro/US dollar pair may reach parity in the second quarter of 2025. Overall, inflationary pressures remain a risk from Trump’s domestic and foreign policies, allowing the Federal Reserve to cut US interest rates only once this year.
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