- During yesterday's trading session, the EUR/USD currency pair attempted to rebound upwards, but its gains did not exceed the 1.0381 level.
- With bears maintaining stronger control, it remained stable around the 1.0359 level at the time of writing this analysis, awaiting cautiously for the announcement of US inflation data today through the Consumer Price Index.
- The Euro's attempts to rebound upwards came as investors reacted to the European Union's firm stance against US tariffs on European steel and aluminium.
The European Union has vowed to retaliate against US tariffs on European steel and aluminium, with European Commission President Ursula von der Leyen describing them as "unjustified" and promising firm countermeasures. Also, German Chancellor Olaf Scholz warned that Europe would respond "within an hour" if tariffs were imposed.
Powell: Committed to Maintaining US Interest Rates
Yesterday, US Federal Reserve Chairman Jerome Powell, in his semi-annual monetary policy report to Congress, confirmed that with the Federal Reserve's monetary policy stance now significantly less restrictive and the economy remaining strong, there is no urgent need to adjust the US interest rate. Powell added that easing policy too quickly or excessively could hinder progress on inflation, while easing policy too slowly or insufficiently could inappropriately weaken economic activity and employment. Powell also emphasized that the economy has made significant progress towards the central bank's goals over the past two years.
Meanwhile, the conditions of the labour market have subsided from its formerly heated condition, it remains strong. And inflation was very close to the 2 % goal in the long term, although it was still somewhat high. The American Federal Reserve had left the interest rate on federal funds fixed at a range of 4.25 % -4.5 % during its meeting in January 2025, stopping the interest rate reduction course after three consecutive discounts in 2024 with a total full percentage.
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Trading tips:
We still recommend selling the euro for the dollar from every bullish level. Obviously, the negative pressure factors on the euro are still stronger.
EU Position on US Tariffs
The European Union said that it is preparing to impose customs duties on US imports in response to the decision of the United States of America to impose customs duties by 25 % on aluminium and steel. In this regard, European Commission President Ursula von der Line said in a statement: “I feel very regrettable to the decision of the United States of America to impose customs duties on European and aluminium exports.” Also, “unjustified customs duties on the European Union will not pass without a response - will lead to measures Anti -firm and proportional.”
Separately, German Chancellor Olaf Schultz said that if the United States does not leave us another option, the European Union will interact with this as one. Considering the world's largest market with 450 million citizens, we have the power to do so.”
The European Union's response represents another escalation in a commercial war that started with US President Donald Trump's attempts to restore balance to world trade for American producers. Meanwhile, reports indicate that the European Union has prepared multiple lists of US commodities to impose reprisal customs duties on them. However, the details will remain secret and will only be revealed when the European Union interacts with a broader set of customs duties that the United States is expected to be announced soon.
During the first period of Trump, he imposed customs duties on steel and aluminium imports, saying that this step was aimed at protecting US national security because these industries constitute basic industries. Accordingly, the European Union has taken revenge on the imposition of sanctions on American goods such as Harley Davidson motorcycles.
Concurrently, financial markets have shown little reaction to signals that the European Union is ready to confront the United States and engage in a comprehensive trade war. Furthermore, all indications point to the same approach being followed during Trump's second term.
EUR/USD Technical Analysis Today:
There is no change in our technical view of the EUR/USD performance. The overall trend remains bearish, and as is the performance on the daily chart, the support levels of 1.0290 and 1.0200 will remain important for the next stronger bearish move towards the Euro-Dollar parity if the factors of the US Dollar's strength continue due to Trump's policies and signals from the US Federal Reserve. Conversely, and on the same timeframe, a technical break of the bearish trend will not occur without moving towards the resistance levels of 1.0550 and 1.0630 respectively.
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