- Following the market's reaction to the minutes of the latest Federal Reserve meeting and the release of stronger-than-expected US jobs data, the EUR/USD pair experienced significant losses, reaching a support level of 1.0213, its lowest in over two years.
- This was before closing the week's trading stable around the level of 1.0240, the strongest downward trend for the euro dollar ahead of the announcement of a package of important US economic releases led led by US inflation figures.
Trump's Tariffs Could Boost Interest Rates
International Monetary Fund officials warned that Trump's threats of tariffs are already raising longer-term borrowing costs around the world. In this regard, the head of the International Monetary Fund, Kristalina Georgieva, told reporters that uncertainty about the trade policies of the incoming US administration is increasing the headwinds for the global economy and “is being expressed globally through higher long-term interest rates.” She added that this is happening even as short-term interest rates are falling, a “very unusual” combination.
For his part, US President Trump has pledged to impose new tariffs on imports from US adversaries such as China as well as allies including Canada and Mexico, raising concerns that supply chain disruptions could slow economic growth and push prices higher. In the same context, the chief economist at the International Monetary Fund, Pierre-Olivier Gourinchas, previously warned that tariffs and trade uncertainty could weaken global economic growth by about 0.5%.
In recent weeks of 2024 and the early days of 2025, bond yields have risen sharply worldwide, and the US dollar has strengthened as investors weigh the potential impact of Trump's policies in his second term.
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Trading Tips:
The Euro Dollar is closer to parity, which is a rare, important and exciting event for the Forex markets, so be careful and watch carefully what will happen next.
Euro Dollar to Watch US Inflation Data
According to the economic calendar data. The strongest focus from Forex investors will be on the announcement of the US inflation figures, which will have a strong and direct reaction to the future of the US Federal Reserve's policies in the new year 2025 and under new US leadership. Another factor influencing the future of the US Federal Reserve's policies is last week's statement, as the US Department of Labor reported last Friday that employers added a total of 256,000 jobs last month, up from 212,000 jobs in November.
Also announced, the country's unemployment rate, which was expected to remain at around 4.2%, fell to 4.1% last month. Overall, the final US jobs report for 2024 confirms that the economy and employment were able to grow at a strong pace even with interest rates rising significantly from what they were before the pandemic. As a result, the likelihood of the Federal Reserve cutting borrowing costs again in the coming months may be much lower. The Federal Reserve has cut US interest rates three times in 2024, partly due to concerns about slowing employment and growth.
EUR/USD Technical Analysis Today:
Dear reader, our technical outlook for the EUR/USD pair performance has not changed. The overall trend remains downward, and the currency pair is closer to parity. This could happen this week if US inflation data comes in stronger than expected, which could prompt the US Federal Reserve to stop cutting interest rates, coinciding with the imposition of strict tariffs by the Trump administration. Currently, the closest support levels for the euro dollar are 1.0180, 1.0090, and the parity level of 1.0000. furthermore, these levels are sufficient to push technical indicators towards oversold levels, led by the Relative Strength Index and the MACD. Until now, the strategy of selling the euro dollar remains the strongest and most important.
EUR/USD Trading Signals:
We still recommend selling the EUR/USD pair but without taking risks, and activating take-profit and stop-loss orders to ensure the safety of your trading account from any sudden price reversals. Follow our website for free euro dollar and other trading signals.
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