EUR/USD Hits Three-Year High as the US Dollar Suffers Heavy Losses

Key factors driving EUR/USD Movements

The market remains highly sensitive to growing investor concerns over the US economic outlook. Declining confidence in US assets continues to weigh on the USD.

Fears persist over the potential fallout from Donald Trump’s tariff policies. Although the imposition of steep tariffs has been delayed by 90 days, concerns about a slowdown in economic activity remain acute.

Current tariffs on Chinese goods stand at 145%, escalating trade tensions between the US and China and further dampening market sentiment. Meanwhile, the European Union has opted to suspend its retaliatory measures for the same 90-day period, with negotiators seeking a compromise.

The US dollar came under further pressure following the latest inflation data. The core consumer price index (CPI) rose by 2.8% year-on-year in March – the slowest pace since spring 2021. These figures have reinforced expectations of an imminent Federal Reserve rate cut.

Technical Analysis: EUR/USD

H4 Chart Outlook

• The pair found support at 1.1155 before rallying to 1.1380
• A correction towards 1.1155 is possible in the near term
• Once this pullback concludes, another upside move towards 1.1400 may follow, marking the end of the current bullish wave
• This scenario is supported by the MACD indicator, with its signal line above zero and pointing firmly upwards 

H1 Chart Outlook

• The market has achieved its local bullish target at 1.1380
• A corrective phase is forming, with 1.1155 as the next key level
• A rebound towards 1.1400 could occur later today, but a subsequent decline to 1.0900 could then come into play
• The Stochastic oscillator aligns with this view, as its signal line sits below 50 and is trending downwards towards 20 

Conclusion

The EUR/USD rally reflects broad USD weakness, driven by economic concerns, trade tensions, and softening inflation. While a short-term correction is likely, the pair could extend gains towards 1.1400 before a deeper pullback materialises.

Disclaimer

Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.