EUR/USD has risen to near 1.0500 during North American trading hours as the US Dollar weakens amidst concerns over a potential global trade war. The US Dollar Index dipped to approximately 106.45 after President Trump announced his tariff plans for Canada and Mexico remain unchanged.
The upcoming US Durable Goods Orders and Personal Consumption Expenditures Price Index data points are significant for the US Dollar, with focus on the PCE inflation data due to Federal Reserve officials’ concerns around disinflation. Additionally, February’s US Consumer Confidence data is expected later today.
The Euro has strengthened despite uncertainty surrounding the upcoming coalition government in Germany, led by Frederich Merz. Merz’s attempts to uplift the German economy face challenges, particularly with fears of tariffs from the US looming.
Eurozone Q4 Negotiated Wage Rates decreased to 4.12%, down from 5.43% previously. This decline could influence expectations for European Central Bank interest rate cuts amid decelerating wage growth.
EUR/USD technical analysis indicates a minor bullish trend, supported by the 50-day Exponential Moving Average at about 1.0440. Key support lies at the February 10 low of 1.0285, while the December 6 high of 1.0630 presents a resistance barrier.
The upward movement of EUR/USD towards the 1.0500 mark reflects weakness in the US Dollar, largely driven by concerns that trade tensions could escalate. The drop in the US Dollar Index to 106.45 came after Donald reaffirmed that tariffs on Canadian and Mexican exports would remain unchanged, keeping market unease elevated.
The upcoming economic releases from the US will likely shape market sentiment further. The Durable Goods Orders report will provide insight into business investment trends, while the PCE Price Index carries weight due to its relevance in shaping the Federal Reserve’s stance on inflation. Recently, policymakers have expressed worries about disinflation, making the PCE data especially important. Additionally, consumer confidence figures for February will offer clues on household sentiment, which is vital for gauging future spending patterns.
On the European side, the Euro has strengthened even as uncertainty surrounds Germany’s incoming coalition government. Frederich’s efforts to revitalise Germany’s economy face hurdles, with US tariff threats causing further concern. The recent drop in Eurozone Q4 Negotiated Wage Rates from 5.43% to 4.12% raises questions about future wage growth, which could impact expectations for European Central Bank rate cuts. Slower wage increases often translate into weaker inflation pressures, which may prompt policymakers to consider easing monetary policy sooner than previously expected.
From a technical standpoint, EUR/USD maintains a somewhat positive trajectory. The 50-day Exponential Moving Average, currently around 1.0440, acts as a support level, reinforcing the pair’s short-term stability. Should the pair decline, the February 10 low of 1.0285 stands as an important downside level to watch. On the upside, resistance appears near the December 6 high of 1.0630. A move beyond this threshold might encourage traders to target higher levels, while a failure to sustain gains could lead to renewed selling pressure.
For those involved in derivative markets, all of these factors present opportunities as volatility persists. With inflation-related data approaching and political risks in focus, shifts in expectations around interest rates could drive fluctuations. The near-term outlook hinges on upcoming catalysts, particularly how traders interpret economic data against central bank positioning. As we gauge these developments, attention must remain on technical signals alongside policy changes to navigate price movements effectively.
