EUR/USD Faces Further Decline Amid Market Jitters and Trump’s Tariff Threat

Key drivers weighing on EUR/USD

The latest sell-off is driven by heightened trade war fears. On Wednesday, US President Donald Trump announced a 25% tariff on all imported cars and light trucks, set to take effect on 2 April. The move, seen as retaliation against foreign tariffs on US goods, escalates trade tensions. Markets view this as a major risk, with potential consequences including slower US economic growth and higher inflation.

Adding to the bearish sentiment, fresh economic data revealed:

·        US consumer confidence plunged to a four-year low

·        Core capital goods orders (excluding defence and aircraft) declined, breaking a three-month growth streak – a worrying sign for business investment

Investors now await Friday’s Core PCE Price Index – the Fed’s preferred inflation gauge – and the revised US Q4 2024 GDP estimate, which could set near-term market direction.

Technical analysis of EUR/USD

On the H4 chart of EUR/USD, the market completed a downward move to 1.0733. A correction towards 1.0855 is likely today. Once this correction ends, a new decline towards 1.0707 may begin. Technically, this scenario is confirmed by the MACD indicator: its signal line is below zero and pointing downward to new lows.

On the H1 EUR/USD chart, the market has formed a consolidation range around the level of 1.0826 before breaking lower to 1.0733. This move has nearly met its local downside target. Today, a corrective pullback towards 1.0826 (testing from below) is possible. Once this correction ends, a renewed decline towards 1.0700 could unfold. This move is viewed as the first wave of a broader downtrend. If this level is reached, another bounce towards 1.0826 cannot be ruled out. Technically, this scenario is confirmed by the Stochastic oscillator: its signal line is above 80 and preparing to drop towards 20.

Conclusion

With trade war risks weighing on sentiment and technical indicators pointing to continued downside, EUR/USD could test 1.0700 in the coming sessions. Traders should monitor US inflation data and GDP revisions for confirmation of the next major move.

Disclaimer

Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.