The EUR/USD has been moving in a very tight range above 1.0750 in early Thursday, after six consecutive days of lost ground and a test of a two-week low near 1.0730. Although the pair has displayed a moderate bounce, the technical and macro backdrop indicates that euro strength may struggle to gain meaningful traction in the short haul.
The renewed US trade aggression is driving the euro’s weakness. President Donald Trump has already implemented a permanent 25% tariff on all imported vehicles, starting April 2, but now he’s threatening much larger tariffs on the EU and Canada if he believes U.S. interests have been harmed.
Traders would be aware that this new escalation may prevent the euro from recovering for the foreseeable future, restricting their level of participation.
Dollar Firms as Cautious Sentiment Persists
The US dollar receives support as traders balance the geopolitical and economic risks from Washington’s latest trade threats. Trump’s blunt, sweeping tariffs proposal has stoked fears of a wider US-EU trade divide that could hurt both trade blocs.
US stock index futures are mixed Thursday morning as market participants remain uncertain. If Wall Street opens on the back foot on the day, this would likely fuel safe-haven demand for the USD, keeping the downside pressure on EUR/USD intact.
However, the focus will also shift to the US initial jobless claims report, which is due out later. A sharp increase in claims could keep the dollar in the pressure cooker and provide the euro with some temporary assistance.
Euro This Week: Broad-Based Weakness
The euro has struggled against all comers this week, especially commodity-linked and risk-sensitive currencies. It is the weakest major currency vs the Australian dollar, down more than 1%, while it has lost ground vs most other major peers, including vs the USD (-0.49%), the CAD (-0.90%), and the GBP (-0.55%).
This points to euro-specific weakness, not merely reflecting very broad-based strength in the US dollar but also that traders are pricing in concerns over eurozone resilience to a potential US trade retaliation.
EUR/USD Technical Outlook: Bearish Bias Still In Play
Technically, EUR/USD is still in a bearish channel, and Thursday’s minor rally above 1.0750 has not yet confirmed a reversal:
- 4-Hour RSI Still Under 40, Points to Weak Bullish Momentum
- The pair ended below the 20-day SMA for the third time in three weeks — which is bearish.
- • The first major support level is at 1.0730 (200-day SMA).
- A drop below this may pave the way for steeper losses toward 1.0630–1.0640.
- On the upside, the immediate hurdle stands at 1.0800, followed by some key levels at 1.0850 and 1.0900, also likely to limit any recovery attempts in the immediate term.
FAQs
Why is the euro so weak compared to the US dollar?
The euro is struggling with renewed trade tensions after President Trump announced aggressive tariffs on US-EU trade.
What would drive EUR/USD down from here?
Should the bears manage to push firmly below 1.0730, the trend would turn further to the downside, with 1.0640 or lower as the next target, especially if the USD keeps on strengthening on haven buying.
If US jobless claims rise, can EUR/USD bounce back?
A jump in claims would likely pressure the dollar and provide a brief boost to the euro. However, wider trade worries may keep a lid on any sustained euro strength.
What are the next key levels to watch out for?
- Support: 1.0730, 1.0630
- R: 1.0800, 1.0850, 1.0900
Will EUR/USD recovery be sustained?
Bearish technicals and persistent macro headwinds suggest the scope for any recovery in EUR/USD will be limited unless trade tensions de-escalate or USD sentiment shifts mean a hard negative.
