Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0600.
- Add a stop-loss at 1.0400.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0400.
- Add a stop-loss at 1.0600.
The EUR/USD exchange rate has moved sideways this week as the market participants waited for Donald Trump’s statement on tariffs. It was trading at 1.0500 on Thursday ahead of the US GDP and personal consumption expenditure (PCE) data.
US GDP and PCE data ahead
The EUR/USD pair has wavered as the market waited for the statement by Donald Trump on tariffs. He has confirmed that tariffs on Mexican and Canadian goods will go on as planned. This means that the US will implement a 25% tariff on all imports from the two countries, which will lead to countermeasures.
Tariffs will push the US economy to a stagflation period, which is characterized by weak economic growth and high inflation. Consumer inflation has moved back to 3%, while the core figure has moved to 3.3%, much higher than the Federal Reserve’s target of 2.0%.
The US will publish the personal consumption expenditure (PCE) data on Friday. These are important numbers that provide more information about the state of urban and rural inflation in the US.
Trump’s tariffs will likely lead to a slow economic growth, disrupting the recent growth. Data to be released on Thursday will show that the economy expanded by 2.3% in the fourth quarter. The US will also release the latest initial and continuing jobless claims numbers.
The EUR/USD pair will also react to the upcoming minutes of the latest European Central Bank (ECB) meeting. These minutes will provide more color about the recent meeting and what to expect in the next ones.
Analysts expect the central bank will pause its interest rate cuts now that the European economy is doing better.
EUR/USD technical analysis
The daily chart shows that the EUR/USD pair found a strong bottom at 1.0215 between January anf February. It then bounced back and found substantial resistance at 1.0506, where it failed to move above since December 17.
The pair has moved above the 50-day moving average and the 23.6% Fibonacci Retracement level. Also, the MACD and the Relative Stength Index (RSI) have all pointed upwards, pointing to higher momentum.
Therefore, the pair will likely continue rising as bulls target the 50% retracement level at 1.0700. This view will be confirmed if it moves above the resistance level at 1.0506. The alternative scenario is where it drops to the support at 1.0400.
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