EURUSD Technical Analysis – The USD gets once again a boost on tariffs headlines

Fundamental
Overview

The USD got boosted once
again by negative tariffs news overnight as Bessent talked about universal
tariffs starting at 2.5% and gradually increasing by the same amount every
month, which eventually could reach 20%. Trump later doubled down on that
saying that he wants tariffs much bigger than 2.5%.

The tariffs risk has been
the only thing keeping a bid under the US Dollar after the US inflation data
marked the top in the repricing in interest rates expectations. So, when this
risk eases, the greenback weakens and vice versa. Tomorrow, we have the FOMC decision where the central bank is expected to keep rates steady. If Fed Chair Powell sounds more dovish, we could see the greenback weakening again.

On the EUR side, the latest
PMIs showed an encouraging rebound in activity which
triggered a repricing in rate cuts expectations and gave the Euro a boost. The
ECB this week is expected to cut interest rates by 25 bps but the focus will be
on forward guidance. If the central bank sounds less dovish, we should see the
single currency rallying across the board.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that EURUSD fell back below the 1.0450 level following negative tariffs
headlines. The sellers will likely pile in around these levels with a defined
risk above the 1.0450 level to extend the pullback into the 1.0350 level. The
buyers, on the other hand, will likely step in around the 1.0350 level to
position for a rally into the 1.06 handle with a better risk to reward setup.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have an upward trendline defining the bullish momentum. The
buyers will likely lean on the trendline to keep pushing into new highs, while
the sellers will look for a break lower to increase the bearish bets into the
1.0350 level.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we are near the lower bound of the average daily range for today, so we might see some
consolidation here or a spike lower in case the US consumer confidence surprises
to the upside. More aggressive buyers, might want to see the price rising back
above the 1.0450 level to position for a rally into new highs.

Upcoming
Catalysts

Today we get the US Consumer Confidence data. Tomorrow, we
have the FOMC Policy Decision. On Thursday, we have the ECB Policy Decision,
the US Q4 GDP report and the latest US Jobless Claims figures. On Friday, we
conclude the week with the US PCE and the US Employment Cost Index.

This article was written by Giuseppe Dellamotta at www.forexlive.com.