- Markets barely reacted to Trump’s latest tariff threats.
- Powell stated that the Fed would not hurry to lower interest rates.
- Economists believe US inflation increased by 0.3% in January.
The EUR/USD price analysis shows easing tariff concerns that have weakened the dollar and strengthened the euro. Markets have shifted their focus to the upcoming US consumer inflation report, which will give more clues on the outlook for monetary policy in the US.
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Traders are less concerned about Trump’s tariffs as markets barely reacted to his latest threats. The US President promised a 25% tariff on steel and aluminium imports. The new tariffs will impact the Eurozone and Canada, among other nations. However, the Eurozone has promised an appropriate response to any such duties. The tariffs would pressure the ECB to further cut interest rates as economic demand slowed down.
On Tuesday, Fed Chair Jerome Powell testified before Congress that the Fed would not hurry to lower interest rates. His remarks revealed caution among policymakers due to uncertainty regarding the impact of Trump’s policies. The dollar fell because markets had expected these remarks.
Meanwhile, market participants expect the US consumer inflation report for guidance on the outlook for Fed rate cuts. Economists believe inflation increased by 0.3% in January. A bigger increase will lower expectations for rate cuts, boosting the dollar. On the other hand, if inflation is softer than expected, the dollar will drop as rate-cut expectations rise.
EUR/USD key events today
- US core CPI m/m
- US CPI m/m
- US CPI y/y
- Fed Chair Powell Testifies
EUR/USD technical price analysis: Bulls testing solid resistance hurdle
On the technical side, the EUR/USD price has broken above the 30-SMA, and the RSI trades above 50, suggesting a bullish bias. The price recently bounced higher after meeting the 1.0301 support level.
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However, bulls are facing a solid resistance trendline. Moreover, right after the trendline is the 1.0400 key level. A break above these levels will confirm a bullish shift in sentiment. However, bulls must push higher and start making higher highs and lows to confirm a new bullish trend.
On the other hand, if any of these two resistance levels hold firm, the price will likely drop back below the 30-SMA to retest the 1.0301 support level. A break below this level would confirm a continuation of the downtrend.
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