European leaders have unified to support Ukraine, which has strengthened the Euro (EUR), recently positioned at 1.0416. An emergency summit discussed a potential €20 billion military package and increased defence spending, with broader discussions planned for Thursday.
In contrast, the announcement of tariffs by Trump, particularly a proposed 25% tariff on the EU, could negatively impact the EUR. Technical analysis indicates resistance at various levels, including 1.0420 and 1.0510, while support lies at 1.0360/90 and 1.0280.
European Support For Ukraine
A strong Consumer Price Index (CPI) estimate this week may assist the EUR’s recovery ahead of the ECB meeting, which has already factored in an 85 basis point cut this year. Any unexpected shifts in this regard could bolster the Euro’s position.
The unity among European leaders in backing Ukraine has provided a boost to the Euro, which has recently been trading around the 1.0416 level. During an emergency summit, discussions revolved around a €20 billion military support package, alongside plans to allocate more resources towards defence. A broader conversation is set to continue on Thursday, which could shape investor sentiment around the Euro in the coming weeks.
On the other hand, Trump’s proposed tariffs, particularly the 25% duty on European goods, present a direct downside risk. Trade restrictions of this scale would place additional pressure on the currency, potentially reversing recent gains. Investors should weigh the timing and potential countermeasures from European officials, especially if these tariffs begin to materialise into concrete policy.
From a technical perspective, there are several key points to watch. Resistance appears firm at levels such as 1.0420 and 1.0510, meaning upward movement may face challenges without a strong enough catalyst. Conversely, should the Euro decline, support around 1.0360 to 1.0390 will be the first test, with another layer down near 1.0280.
Impact Of Inflation Data
This week’s Consumer Price Index (CPI) reading will be an important factor in short-term price movement. If inflation figures exceed expectations, this could reinforce confidence in the Euro’s strength leading up to the upcoming ECB meeting. Market pricing has already accounted for a total of 85 basis points in rate cuts this year. Any deviation from this expectation—either in tone or policy outlook—has the potential to drive the currency even higher, as traders reassess the central bank’s next move.
