- The EUR/USD outlook shows a bullish rally in the dollar.
- Trump said the 25% tariff on Canada and Mexico would not be delayed further.
- Economists believe the ECB will cut rates again in March.
The EUR/USD outlook shows a bullish rally in the dollar after Trump remained firm on Canadian and Mexican tariffs. Meanwhile, the euro collapsed at the increasing risk of tariffs on Eurozone goods. At the same time, a Reuters poll revealed that the European Central Bank will cut rates again in March.
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The greenback rebounded Thursday after Trump said the 25% tariff on Canada and Mexico would not be delayed further. Experts believed the president would delay the tariffs until April. However, he confirmed that they would take effect in March.
These tariffs will reduce demand for imports in the US, increasing demand for local goods. As a result, inflation will increase, forcing the Fed to keep interest rates elevated. On the other hand, Canada’s and Mexico’s economies will suffer the impact of reduced demand. Additionally, there is a higher risk Trump will implement a 25% tariff on European cars and goods, hurting the Eurozone economy.
Meanwhile, a Reuters poll on Thursday revealed that the ECB will cut rates again in March. Market participants will wait for guidance on future moves. However, experts believe the central bank will implement two more cuts before July.
EUR/USD key events today
- German preliminary CPI m/m
- US core PCE price index m/m
EUR/USD technical outlook: Bears make a lower low below 1.0400
On the technical side, the EUR/USD price has made a milestone move that has broken below the 1.0400 support level. Moreover, the price trades far below the 30-SMA, with the RSI nearly oversold, indicating a solid bearish bias.
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Previously, EUR/USD was in a strong bullish trend, making a series of higher highs and lows. At the same time, it respected a support trendline and bounced higher every time it retested the line. However, bulls showed weakness when the price made a weak high. Although it broke above the 1.0500 resistance, it failed to sustain a move higher and pulled back immediately. This allowed bears to resurface and break below the support trendline.
The new bearish move has shown solid momentum. Therefore, it might soon reach the 1.0301 support level. However, it might retest the 30-SMA before continuing lower.
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