CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Euro Forecast: EUR/USD Rally on Tariff Delay

Article By: ,  Sr. Strategist
Sunday 2:00 AM

Euro Talking Points:

  • It was a strong week for the single currency particularly against the U.S. Dollar as the imminent threat of tariffs took a step back.
  • This isn’t necessarily a risk that can be dismissed yet as Trump warned that tariffs on autos are on the way. So while price action in EUR/USD retains a bullish look, there could be a continued sense of vulnerability.

It was a strong week for EUR/USD and the pair is now back to re-testing the 1.0500 level. While the fundamentals around the Eurozone can’t really be qualified as ‘great,’ and while U.S. inflation remains high, there’s clearly another drive point here and that saw some relaxation last week after President Trump announced reciprocal tariffs. There was a growing sense of concern that tariffs may be levied aggressively on Europe and this is something we can see impacting the pair on the open two weeks ago, following comments from Trump that European tariffs were coming ‘pretty soon.’ He went on to say ““they don’t take our cars, they don’t take our farm products, they take almost nothing, and we take everything from them. Millions of cars, tremendous amounts of food and farm products.”

The weekly open after that comment was made, EUR/USD sold off quickly, but held support above the prior 2025 low around the 1.0200 handle. And since then, it’s largely been a theme of recovery, with a strong push on Thursday after reciprocal tariffs were announced, going along with a support break in the US Dollar.

The driving item wasn’t necessarily the reciprocal tariffs themselves but the implementation date of April 1st, which removed some pressure from the situation, allowing EUR/USD to rally back to the 1.0500 handle.

 

EUR/USD Daily Chart

 Chart prepared by James Stanley; data derived from Tradingview

 

EUR/USD Technical Structure

 

EUR/USD sellers ran into a massive spot of support a couple of weeks into the New Year as there are two Fibonacci levels of note right at the 1.0200 handle. And then the sell-off in early-Feb saw that price defended, leading to a higher-low. But the recovery from that sell-off remained cautious as Trump had later announced that reciprocal tariffs were coming and given the comment that had caused the sell-off in the pair about tariffs coming ‘pretty soon,’ it was obvious that this week’s announcement was something that had constrained the bullish theme in EUR/USD.

But on Thursday when the reciprocal tariff announcement came, even though it could have consequence for Europe as Trump said that VAT would be considered as a tariff that the U.S. would match, it was the implementation date that seemed to allay alarm. And that led to a support breach in the USD and the rally in EUR/USD that pushed the pair back to the 1.0500 handle.

One might even think that we’ve seen the apex of the struggle, and that a month and a half brings ample time for resolution. But caution should remain, as the reciprocal tariff announcement also brought warning that tariffs would be coming on automobiles, and from the above quote, cars were the first item mentioned by Trump.

President Trump could keep this topic in the headlines by focusing auto tariffs on Europe which would be a large negotiation chip, and this is something that could similarly be seen as bearish for the Euro and bullish for the USD, and I’d also expect it to have a bearish U.S. equity component which is why I’d question the potential for follow-through.

In that event, I’d look for pullbacks to hold higher-lows, and the 1.0400 area would be ideal for such as this had held resistance in the prior week and there’s two different Fibonacci levels in tight proximity.

 

EUR/USD Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

 

EUR/USD Bigger Picture

 

Taking a step back to the weekly chart and that 1.0533 Fibonacci level becomes a bit more important. That’s the 78.6% retracement of the December-January major move, and that’s the price that has so far held the 2025 high.

If bulls can force a break, the door opens to re-test of that prior high, which is confluent with the longer-term Fibonacci level at 1.0611. In that scenario, we’re likely looking at DXY driving back into its prior range, and it would seem that some help would be needed here for that outcome, something more than just Trump delaying tariffs or perhaps avoiding an announcement on tariffs on autos. This would probably need some negative U.S. data, and/or some positive European data to drive a break of 1.0630 in EUR/USD.

 

EUR/USD Weekly Chart

Chart prepared by James Stanley; data derived from Tradingview

 

 

--- written by James Stanley, Senior Strategist

 

Euro Talking Points:

  • It was a strong week for the single currency particularly against the U.S. Dollar as the imminent threat of tariffs took a step back.
  • This isn’t necessarily a risk that can be dismissed yet as Trump warned that tariffs on autos are on the way. So while price action in EUR/USD retains a bullish look, there could be a continued sense of vulnerability.
  • I’ll be looking at EUR/USD along with several other USD pairs in next Tuesday’s webinar: Click here to register.

 

EURUSD AD

 

It was a strong week for EUR/USD and the pair is now back to re-testing the 1.0500 level. While the fundamentals around the Eurozone can’t really be qualified as ‘great,’ and while U.S. inflation remains high, there’s clearly another drive point here and that saw some relaxation last week after President Trump announced reciprocal tariffs. There was a growing sense of concern that tariffs may be levied aggressively on Europe and this is something we can see impacting the pair on the open two weeks ago, following comments from Trump that European tariffs were coming ‘pretty soon.’ He went on to say ““they don’t take our cars, they don’t take our farm products, they take almost nothing, and we take everything from them. Millions of cars, tremendous amounts of food and farm products.”

The weekly open after that comment was made, EUR/USD sold off quickly, but held support above the prior 2025 low around the 1.0200 handle. And since then, it’s largely been a theme of recovery, with a strong push on Thursday after reciprocal tariffs were announced, going along with a support break in the US Dollar.

The driving item wasn’t necessarily the reciprocal tariffs themselves but the implementation date of April 1st, which removed some pressure from the situation, allowing EUR/USD to rally back to the 1.0500 handle.

 

EUR/USD Daily Chart

 Chart prepared by James Stanley; data derived from Tradingview

 

EUR/USD Technical Structure

 

EUR/USD sellers ran into a massive spot of support a couple of weeks into the New Year as there are two Fibonacci levels of note right at the 1.0200 handle. And then the sell-off in early-Feb saw that price defended, leading to a higher-low. But the recovery from that sell-off remained cautious as Trump had later announced that reciprocal tariffs were coming and given the comment that had caused the sell-off in the pair about tariffs coming ‘pretty soon,’ it was obvious that this week’s announcement was something that had constrained the bullish theme in EUR/USD.

But on Thursday when the reciprocal tariff announcement came, even though it could have consequence for Europe as Trump said that VAT would be considered as a tariff that the U.S. would match, it was the implementation date that seemed to allay alarm. And that led to a support breach in the USD and the rally in EUR/USD that pushed the pair back to the 1.0500 handle.

One might even think that we’ve seen the apex of the struggle, and that a month and a half brings ample time for resolution. But caution should remain, as the reciprocal tariff announcement also brought warning that tariffs would be coming on automobiles, and from the above quote, cars were the first item mentioned by Trump.

President Trump could keep this topic in the headlines by focusing auto tariffs on Europe which would be a large negotiation chip, and this is something that could similarly be seen as bearish for the Euro and bullish for the USD, and I’d also expect it to have a bearish U.S. equity component which is why I’d question the potential for follow-through.

In that event, I’d look for pullbacks to hold higher-lows, and the 1.0400 area would be ideal for such as this had held resistance in the prior week and there’s two different Fibonacci levels in tight proximity.

 

EURUSD AD

 

EUR/USD Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

 

EUR/USD Bigger Picture

 

Taking a step back to the weekly chart and that 1.0533 Fibonacci level becomes a bit more important. That’s the 78.6% retracement of the December-January major move, and that’s the price that has so far held the 2025 high.

If bulls can force a break, the door opens to re-test of that prior high, which is confluent with the longer-term Fibonacci level at 1.0611. In that scenario, we’re likely looking at DXY driving back into its prior range, and it would seem that some help would be needed here for that outcome, something more than just Trump delaying tariffs or perhaps avoiding an announcement on tariffs on autos. This would probably need some negative U.S. data, and/or some positive European data to drive a break of 1.0630 in EUR/USD.

 

EUR/USD Weekly Chart

Chart prepared by James Stanley; data derived from Tradingview

 

 

--- written by James Stanley, Senior Strategist

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2025