The EUR/USD pair, the most heavily traded currency pair globally, is experiencing sustained bearish pressure, with its negative outlook persisting below the 100-day Exponential Moving Average (EMA). Accounting for an estimated 30% of all currency transactions worldwide, this major pair is currently facing significant challenges. As of the early European session on Tuesday, the EUR/USD extended its downside to approximately 1.0305. This movement comes in the wake of US President Donald Trump's decision to increase steel and aluminum tariffs by 25%, affecting all imports and voiding trade agreements with key US allies, including Australia. The Greenback has strengthened as a result of these developments, applying additional pressure on the Euro.
The bearish sentiment for EUR/USD remains intact as it stays capped below the critical 100-day EMA on the daily chart. Market analysts point to the Relative Strength Index (RSI) indicator, which currently signals a bearish trend. The first downside target is set at 1.0250, aligning with the lower limit of the Bollinger Band. If the pair continues to decline, it could fall further into the 1.0210-1.0200 zone, which represents both the February 3 low and a significant psychological mark.
Initial support for EUR/USD emerges at 1.0250, with the first upside barrier positioned at 1.0406, the high recorded on February 6. Should the pair manage to sustain trading above this level, it may attract buyers towards 1.0504, marking the upper boundary of the Bollinger Band.
The recent decline in EUR/USD is primarily attributed to President Trump's aggressive trade policies, which have sparked concerns over potential reciprocal tariffs from other countries. The President's announcement has led to a stronger US Dollar, thereby exerting downward pressure on major currency pairs such as EUR/USD and AUD/USD.
The European Central Bank (ECB), headquartered in Frankfurt, Germany, serves as the reserve bank for the Eurozone, setting interest rates and managing monetary policy. The ECB Governing Council convenes eight times a year to make crucial monetary policy decisions. These meetings are closely monitored by traders and investors for any indications of shifts in economic strategies.
Amidst these developments, the Australian Dollar has also weakened against the US Dollar, adding to the downward pressure on the AUD/USD pair. This movement underscores the broader impact of President Trump's tariff policies on global currency markets.