Key Analysis Points:
- EUR/USD in Early Bullish Reversal, Eyes on 1.10 Peak
- Trump's Tariffs Impacting Markets
- Central Bank Policies Closely Monitored
A remarkable bullish trading week saw bulls control the EUR/USD currency pair, with rebound gains reaching the resistance level of 1.0888, the pair's highest in four months, and closing the week's trading stable around 1.0832. This followed the Forex market's most popular pair reacting to US job numbers and optimistic comments from US Federal Reserve Chairman Jerome Powell regarding US economic performance, despite trade wars led by the Trump administration.
US stocks witness fluctuations due to Trump
At the end of last week's trading and across the platforms of stock trading companies, US stock market indices rose on Wall Street. The performance of US stocks was clearly volatile amid concerns about the future of the US economy and uncertainty about what US President Donald Trump might do with tariffs and his threat to other global economies.
According to trading, the Standard & Poor's 500 index rose by 0.6% after recovering from a previous loss of 1.3%. It was coming from a difficult period where it swung by more than 1%, up or down, for six consecutive days. The Dow Jones Industrial Average rose by 222 points, or 0.5%, and the Nasdaq Composite Index rose by 0.7%. Overall, last week's trading was the worst for the Standard & Poor's 500 since September 2024, and the index was slightly below its all-time high, which it recorded last month by about 6%.
Top Forex Brokers
Jerome Powell Reassures Markets on US Economy
For his part, before the close of trading last week, which may also be reflected in the start of trading this new week. The US Federal Reserve Chairman helped ease market concerns after he said he believes the US economy appears stable for now and does not feel pressure to cut interest rates to support it. Investors have generally been betting in recent weeks that the Fed will be forced to cut US interest rates more than three times this year after a series of weaker-than-expected economic reports. But the US central banker responded to speculation that he and other Fed officials might feel pressure to act soon.
Powell stated about maintaining US interest rates: "The costs of being careful are very low right now." "The economy is fine. It doesn't need us to do anything really. We can wait, and we should wait."
Recently, disappointing polls have shown confidence in US businesses and households has been falling due to uncertainty over Trump’s tariffs, and economists have been waiting to see if the latest US report will show whether that translates into real pain for the economy and the labour market.
Trading Tips:
Be careful. The recent gains of the euro dollar need strength factors to continue and exceed the 1.10 peak to confirm the upward shift, otherwise it will be exposed to profit-taking sales.
US Tariffs Confuse Forecasts
Recently, the US government's sudden actions on tariffs – first imposing them on trade partners, then exempting some, and then doing it again – have created uncertainty for businesses. This has raised concerns that companies may freeze in response to what has been described as "chaos" and pull back on hiring. Meanwhile, US households are bracing for rising inflation due to tariffs, weakening their confidence and potentially hindering their spending. This would further drain energy from the economy.
As for the US trade wars. Trump stated last Friday that he wants tariffs to bring jobs back to the United States, and he gave no indication that more certainty is imminent for financial markets. He stated in comments from the Oval Office: “There will always be changes and adjustments.” Trump added about the impact on the economy: "There could be some turmoil," before saying: "I solved a little bit of that" by giving a one-month reprieve for tariffs on Mexican and Canadian imports to automakers.
EUR/USD Technical Analysis Today:
According to the trading on the daily chart above, the price of the euro against the US dollar EUR/USD is moving within an ascending channel that was recently formed and lacks a move towards the psychological resistance level of 1.1000 to confirm the strength of the shift to the general upward trend. Also, this peak may push the technical indicators to strong overbought levels led by the relative strength index and the MACD indicator. In contrast, and on the same time frame, the support of 1.0650 will remain a threat to the current upward shift of the euro against the US dollar.
The EUR/USD pair may remain stable in its current path until the markets react to the announcement of US inflation figures this week through the Consumer Price Index and the Producer Price Index, in addition to being affected by Trump’s surprise trade decisions, especially regarding the imposition of US tariffs on European imports, which will be negative for the euro.
Ready to trade our daily Forex analysis? We’ve made a list of the best forex demo accounts worth trading with.