- What happened to the EUR/USD pair's trading last week confirms that the exchange rate is set for more volatility as investors and markets react to the official implementation of US tariffs and the extent of the expansion of global trade wars.
- According to licensed trading company platforms, the EUR/USD price jumped towards the 1.1145 resistance level, the pair's highest in six months, before quickly retreating amid profit-taking selloffs, which we often advised acting upon whenever the EUR/USD price moved upwards.
- Consequently, the EUR/USD price retreated towards the 1.0923 support level before closing the week's trading stable around 1.0962, ahead of the start of the US inflation week's trading.
Cautious Monitoring of US Inflation Figures Announcement
According to financial market experts' forecasts, US inflation is expected to provide indications of the repercussions of Trump's tariffs. American households are likely to see a slight decrease in overall inflation last month, which economists consider a temporary respite following the wave of tariffs imposed by US President Donald Trump. According to economic calendar data, the Bureau of Labor Statistics figures next Thursday are expected to show a slight increase in the US Consumer Price Index (CPI) of 0.1%, the smallest increase since July, based on the average estimates of economists surveyed by Bloomberg.
Meanwhile, the core CPI, a more accurate measure of underlying inflation because it excludes often volatile food and energy costs, is expected to rise 0.3% from February and 3% from a year earlier. This would be the slowest annual pace since 2021.
In general, economists are likely to pay close attention to commodity price inflation in March, as it will help clarify how quickly the higher US tariffs on Chinese goods are reaching American consumers. Trump imposed 10% tariffs on China in February and again last month, in addition to higher tariffs on global steel and aluminium imports, which took effect on March 12. Canada and Mexico have also imposed higher US tariffs on goods not covered by the FTA.
Additionally, there is a risk that goods price inflation will begin to worsen before Trump's April 2 announcement of comprehensive tariffs, if traders begin to raise prices pre-emptively. During the first two months of the year, the core CPI for goods, excluding food and energy, showed signs of a halt in the years-long deflationary trend.
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Trading Tips:
We still recommend selling the euro against the US dollar from every level of appreciation.
Will Europe Retaliate Against the United States?
According to economic experts' views, the repercussions of Trump's global tariff war will continue throughout the region, with EU trade ministers scheduled to meet today, Monday. Finance ministers will meet on Friday. For his part, French Finance Minister Eric Lombard, in an interview published on Saturday evening, stated that the EU's response to US tariffs could include regulating the use of data by major US technology companies.
Eurozone data will focus on the backdrop of the manufacturing sector before the White House launches its fierce attack. German industrial production and trade figures for February will be released on Monday, followed by Italian factory output on Thursday. At the same time, the European Central Bank will enter a media blackout period on Thursday before its decision on April 17, the outcome of which – despite market bets – remains uncertain.
EUR/USD Technical Analysis Today:
According to the daily chart performance above, the EUR/USD pair has an opportunity for an upward rebound if it moves towards and above the psychological resistance of 1.1000, which may trigger technical buying and thus prepare for bullish breakouts that support the upward turn of the Relative Strength Index and the MACD indicator. Technically, this may occur if bulls move the pair towards the resistance levels of 1.1035 and 1.1120, respectively. Conversely, on the same timeframe, the 1.0880 support level will remain a turning point and a threat to the current upward correction. Also, the matter will end with bears moving towards the psychological support level of 1.0800.
The EUR/USD pair may remain in its current range until the reaction to the announcement of US tariffs and this reaction, along with the announcement of US inflation figures and the content of the latest Federal Reserve meeting minutes.
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