EUR/USD faces pressure as Trump’s tariff threats improve USD’s appeal
FUNDAMENTAL OVERVIEW:
- EUR/USD drops toward 1.0370 as January inflation slows across six German states.
- Donald Trump warns of 100% tariffs on BRICS nations and 25% on Mexico and Canada.
- The Federal Reserve maintained interest rates unchanged on Wednesday.
EUR/USD remains under pressure as the US Dollar (USD) strengthens, with the US Dollar Index (DXY) climbing to a fresh weekly high near 108.35. The Greenback’s safe-haven appeal has intensified following remarks from US President Donald Trump, who reaffirmed his intent to impose substantial tariffs on North American partners and BRICS nations on Thursday.
Trump stated on his social media platform, TruthSocial, that he expects BRICS to pledge not to “create a new currency or support any other currency” as an alternative to the US Dollar. He warned that any country attempting otherwise would “face 100% tariffs” and should prepare to “say goodbye to selling into the wonderful US economy.”
Market analysts suggest that Trump is leveraging tariffs as a strategic tool to advance his economic agenda. The implementation of such hefty tariffs could drive inflation higher in the US economy, potentially reinforcing the Federal Reserve’s (Fed) resolve to maintain interest rates at their current range of 4.25%-4.50% for an extended period.
Looking ahead, investors will turn their attention to the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for January, set to be released on Monday.
EUR/USD TECHNICAL ANALYSIS H4 CHART:
Technical Overview:
EUR/USD is trading within a up channel.
EUR/USD is moving below all 20&50 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Selling Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 1.0458
Immediate support level: 1.0365
HOW TO TRADE EUR/USD
EUR/USD experienced a sharp decline before rebounding from the support zone and moving higher. However, the upward momentum was short-lived, as the pair erased its gains and reversed lower. Currently, it is trading near a key support zone and around the 100-day EMA. A breakdown below this level could open the door for further declines.