- For three consecutive trading sessions, the EUR/USD currency pair has been moving in an upward rebound, with gains extending to the resistance level of 1.0670, the pair's highest in 2025, and stabilizing around its gains at the time of writing the analysis.
- According to reliable trading companies' platforms, the EUR/USD rose by more than 1% after Trump's tariff confirmations; the US dollar had declined against other major currencies after confirming that the US will proceed with trade tariffs on China, Mexico, and Canada.
- The rule so far has been that escalating tariff tensions were good for the US dollar and bad for the euro as Trump will soon target the European Union.
US tariffs on Europe
In general, tariffs will inevitably be bad for the EU and the Euro. At the moment, there is a realization that the US dollar must adapt to a new reality of rising domestic prices and weak growth, due to Trump's measures. The Atlanta Federal Reserve's real-time GDP growth gauge now expects US Q1 GDP growth to fall to -2.8% from -1.5%.
On the impact on the U.S. economy, economists say, “It’s ridiculous for anyone to claim that foreign countries have more to lose from a trade war than the United States. Tariffs are taxes on imports. The United States relies more on imports than any other country. So, America has more to lose from a trade war than any other country!”
Overall, Trump sparked a 0.80% selloff in the U.S. dollar index after he said on Monday, “There’s no room left for Mexico or Canada. No. The tariffs, as you know, are all up and running. They go into effect tomorrow.”
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With the recent gains, the EUR/USD pair is in the downtrend breakout phase and eyes are on whether the gains will continue or be quickly abandoned, which will depend on the US jobs numbers at the end of the week.
As a result, US stock markets have declined, and investors have raised their expectations for further US interest rate cuts by the Federal Reserve in response. Even after Trump’s comments, market assessments indicated that investors saw a good chance that the threats were aimed at forcing last-minute concessions in negotiations, as was often the case during his first presidency. Therefore, the decision to move forward was somewhat surprising, even in light of Trump’s hawkish rhetoric on the issue.
Reaction from US Economic Data Results
According to Forex trading, the rise in the euro against the US dollar EUR/USD also comes amid a slowdown in US economic data, which cancels out the narrative of US “exceptionalism” and pushes the US performance closer to other places. Despite the euro's gains against the dollar, it still faces a major test in the form of the resistance barrier of 1.0530, which has thwarted the rises since December.
EUR/USD Technical Analysis Today:
According to the performance on the daily chart above, the euro against the US dollar currency pair EUR/USD is in the first stage of breaking the general downward trend. Technically, the upward shift will succeed in moving towards the psychological resistance of 1.0800. consequently, that in turn will move the technical indicators towards strong overbought levels. On the other hand, and in the same time frame, the return of the euro dollar to the support area of 1.0520 will end the current attempts to rise. furthermore, the currency pair may try to maintain the gains of the rebound upwards until the reaction to the announcement of the US jobs numbers at the end of the week.
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