- The EUR/USD outlook shows stronger bearish sentiment.
- Trump announced a 20% reciprocal tariff on Eurozone imports.
- Market participants are almost fully pricing an ECB rate cut next week.
The EUR/USD outlook shows stronger bearish sentiment as Eurozone recession worries increase amid Trump’s tariffs. Meanwhile, the dollar paused its recent decline but remained fragile amid fears of a rapid economic slowdown.
–Are you interested to learn more about South African forex brokers? Check our detailed guide-
The euro paused its rally and dropped on Tuesday as the focus shifted to the clouded outlook for the Eurozone economy. Initially, the currency rallied as the dollar collapsed after Trump’s new tariffs. However, sentiment slowly shifted when it became clear that the Eurozone might tip into a recession.
So far, the US has imposed tariffs on steel aluminum, and automobiles that directly impact the Eurozone economy. Additionally, Trump announced a 20% reciprocal tariff starting this week that will further hurt demand for Eurozone exports.
As a result, experts are forecasting weak economic growth. At the same time, there is massive pressure on the European Central Bank to lower borrowing costs and support the economy. Currently, market participants are almost fully pricing a rate cut next week.
On the other hand, the greenback recovered from its recent lows, indicating a pause in the downtrend. However, fundamentals point to further weakness. The risk of a recession has shot up and the Fed might be forced to implement more rate cuts.
EUR/USD key events today
Market participants do not expect any key economic releases from the Eurozone or the US. Therefore, the price might consolidate.
EUR/USD technical outlook: Bears challenge 30-SMA after bearish engulfing pattern
On the technical side, the EUR/USD price has dropped to challenge the 30-SMA support. The price is on the verge of breaking below the SMA while the RSI has dropped to trade below 50, in bearish territory. However, it is still too early to declare a new bearish bias.
-If you are interested in forex day trading then have a read of our guide to getting started-
Initially, bulls had pushed the price to reach the 1.1101 resistance level. However, they failed to breach the hurdle. Moreover, the price formed a bearish engulfing candle, signaling a looming reversal. After that, EUR/USD dropped to the 30-SMA. A break below the SMA will confirm a bearish shift in sentiment.
However, the price must go below the 1.0800 support to confirm a new bearish trend. If this happens, bears will likely start making lower highs and lows. Moreover, the pair might reach the 1.0500 key psychological level.
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Share
Saqib Iqbal
