EUR/USD holds onto hopes of further growth as investors assess the risks

Key market factors affecting EUR/USD

The primary focus remains on the ongoing global trade war, which has intensified following recent announcements by US President Donald Trump. Trump has pledged to impose additional tariffs on trading partners in response to the EU and Canada's retaliatory measures triggered by earlier US tariffs on steel and aluminium imports.

Further adding to the uncertainty, Trump reaffirmed his commitment to imposing additional retaliatory duties scheduled for April. This has intensified concerns about potential spillover effects on global markets and economic stability.

On the economic data front, US consumer inflation figures for February relieved the currency market. The Consumer Price Index (CPI) rose by 0.2% month-on-month, falling short of the expected 0.3% increase. Year-over-year, inflation eased to 2.8%, down from 3.0% in January. However, the full impact of recent tariffs is yet to materialise, leaving markets cautious about potential inflationary pressures in the coming months.

Investors are now focusing on the Federal Reserve's upcoming policy meeting next week. Market consensus suggests that the Fed will hold interest rates steady, but all eyes will be on the updated economic forecasts and any signals regarding future monetary policy. The decision could play a pivotal role in shaping the near-term trajectory of the EUR/USD pair.

Technical analysis of EUR/USD

On the H4 chart, the EUR/USD pair recently completed a growth wave, reaching a high of 1.0944. Currently, the market is consolidating near the top of this wave. A downward breakout from this range is anticipated, potentially initiating the first wave of decline toward the 1.0533 level. Following this, a corrective rebound to 1.0740 could occur. This scenario is supported by the MACD indicator, whose signal line remains above zero but is trending downward, signalling weakening momentum.

On the H1 chart, the pair is forming a consolidation range around 1.0830, extending up to 1.0944. A decline towards the lower boundary of this range is expected, potentially leading to a breakout and a drop to 1.0750. A subsequent retest of 1.0830 (from below) may follow before a further decline to 1.0533. The Stochastic oscillator reinforces this bearish outlook, with its signal line below the 50 mark and trending downward toward 20.

Conclusion

The EUR/USD pair remains precarious as investors navigate the dual challenges of escalating trade tensions and impending central bank decisions. While technical indicators point to a bearish near-term outlook, market sentiment remains highly sensitive to trade negotiations and macroeconomic data developments. Traders should remain alert to potential volatility and be prepared to adapt their strategies as new information emerges.

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.