EUR/USD revisited multi-year lows, dipping to 1.0211 this week before stabilizing near 1.0285. The euro’s slide accelerates amidst escalating trade tensions potentially involving the European Union.
US Tariffs Weigh on Eurozone
The euro felt pressure following weekend news of US tariffs, initially targeting China, Canada, and Mexico. President Trump hinted at similar measures for the EU, citing trade imbalances. He stated the EU “treats us very badly,” highlighting a significant trade deficit and unequal access for US goods.
Global Trade Wars Threaten Eurozone Economy
Retaliatory tariffs from Canada, with Mexico and China preparing responses, signal a broader trade conflict. Analysts warn that markets may underestimate the risk, favoring safe-haven assets like the US dollar and Japanese yen over the euro and Chinese yuan.
The EU, heavily reliant on high-end manufactured goods exports, is particularly vulnerable to tariffs, potentially exacerbating its economic slowdown. This could prompt further ECB interest rate cuts, further weakening the euro.
Trading Considerations:
Euro gains are susceptible to collapse given the eurozone’s economic woes and the dollar’s safe-haven appeal amid trade uncertainties.
Technical analysis indicates a clear downtrend for EUR/USD, approaching levels last seen in 2005. While some buying interest may emerge, a new low is anticipated this week, potentially leading to parity in the near term.
Expert Euro Dollar Outlook
Goldman Sachs reiterates its forecast of EUR/USD falling below parity. Their analysis suggests that dollar strength could increase significantly against the euro in a global tariff scenario.
EUR/USD Technical Outlook
The EUR/USD remains firmly in a bearish trend. Strong selling pressure suggests a swift move towards parity is possible. Initial targets include support levels at 1.0220, 1.0160, and 1.0090, which would push technical indicators into oversold territory. A short upward correction is possible, should US jobs data disappoint this week. The overall strategy remains to sell the euro against the US dollar.
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