EUR/USD continues to trade below the 1.0800 mark on Thursday, holding onto its recovery from recent three-week lows. The currency pair remains supported by a weakening U.S. Dollar (USD), as investors assess the latest trade policy developments from President Donald Trump.
Market participants are also cautious ahead of Friday’s release of the U.S. Personal Consumption Expenditures (PCE) inflation data, a key indicator influencing Federal Reserve policy decisions.
Despite the recovery, technical indicators suggest limited bullish momentum. The Relative Strength Index (RSI) on the four-hour chart remains below 40, reflecting weak buying interest. Additionally, EUR/USD remains below the descending trend line and has closed under the 20-day Simple Moving Average (SMA) for the first time in over three weeks.
- Key Support Levels:
- 1.0730 – 200-day SMA
- 1.0630-1.0640 – Static level, 200-period SMA
- Resistance Levels:
- 1.0800 – Static level, 20-day SMA
- 1.0850 – 100-period SMA
- 1.0900 – Psychological round level
Trump’s Tariff Threats Stir Market Caution
The USD retained its strength on Wednesday as traders processed fresh trade tensions between the U.S. and the European Union. President Trump announced a 25% tariff on all automobile imports into the U.S., with implementation set for April 2. He further hinted at broader tariffs on Canada and the EU if their economic policies are deemed harmful to the U.S.
These developments have heightened investor uncertainty, potentially limiting upside potential for the euro. As global trade relations remain fragile, traders may be reluctant to place aggressive bets on EUR/USD appreciation.
U.S. Economic Data in Focus
Later in the session, market participants will shift their attention to key economic indicators, including weekly Initial Jobless Claims. A significant rise in unemployment filings could exert downward pressure on the USD, offering support to EUR/USD.
Meanwhile, U.S. stock index futures are showing mixed signals in early European trading. If Wall Street’s major indices open lower, risk aversion could boost the dollar’s safe-haven appeal, weighing on the euro.
Outlook: Volatility Ahead
With trade tensions escalating and U.S. inflation data looming, EUR/USD may experience heightened volatility. If risk sentiment deteriorates, the pair could retreat towards the 1.0730 support level. Conversely, a weaker-than-expected U.S. PCE report may provide the euro with a catalyst to challenge the 1.0800 resistance zone.