EUR/USD is trading lower, near a 10-day low of 1.0815, amid pressure from a stronger US Dollar following the Federal Reserve’s stance on interest rates. The US Dollar Index has risen to approximately 104.15 as the Fed maintained interest rates in the 4.25%-4.50% range for the second consecutive time.
Traders are concerned about potential reciprocal tariffs from US President Trump that could adversely affect the Eurozone’s economic growth. European Central Bank President Christine Lagarde indicated that the inflation effects from the trade tensions would likely ease in the medium term.
Impact On Germany
Germany, reliant on US trade, could be heavily impacted by these tariffs. Concerns about tariffs have led to proposed expansions of spending in Germany to mitigate potential economic fallout.
Technically, EUR/USD has struggled to maintain levels above 1.0900, now resting around 1.0815, with the long-term outlook remaining relatively positive. The December 6 high of 1.0630 serves as a key support level for the pair.
The Euro has come under pressure as the US Dollar strengthens, with the pair now retreating to levels last seen ten days ago. This shift has followed the Federal Reserve’s decision to hold its interest rate range steady for a second consecutive time. The Dollar Index has climbed as a result, hovering around 104.15.
Concerns over trade policy add to this move. With Washington signaling the possibility of new tariffs, markets are weighing the potential slowdown such policies could bring to the Eurozone. Lagarde has reassured that the inflationary effects should diminish over time, but immediate worries persist, particularly given Germany’s dependency on US trade. With Berlin considering increased spending to shield its economy from any forthcoming disruptions, it’s clear that policymakers are alert to the risks.
Technical Outlook
From a technical perspective, EUR/USD has struggled to hold above 1.0900 and now finds itself closer to a previous key level at 1.0815. While the broader view still appears supportive over the long term, attention is now shifting towards the 1.0630 level from early December, where additional support could be found if selling pressure persists.
For traders involved in the derivatives market, this means adjusting expectations accordingly. The prospect of policy-driven volatility, combined with rate differentials, suggests that price movements could be more reactive to external developments. If further retreat occurs, reassessing short-term positioning against these support levels would be a logical step.
