EUR/USD has fallen from a high of 1.1400 to near 1.1330 as the US Dollar rebounds. The currency pair struggles to reclaim its peak of 1.1474, influenced by fears of US stagflation where inflation rises, the economy worsens, and employment slows.
The US Dollar Index has rallied to nearly 100.00 from a recent low of 99.00. There are concerns about US stagflation due to worsening consumer sentiment and rising inflation expectations.
Consumer Sentiment Trends
The University of Michigan’s Consumer Sentiment Index dropped to 50.8 in April, the lowest since June 2022. Meanwhile, escalating tariffs between the US and China are expected to affect economic growth.
China increased tariffs on US goods to 125% in retaliation to US tariff hikes. Increased countermeasures could restrict new investments, impacting economic expansion.
ECB is expected to cut interest rates by 25 basis points to 2.25%. The potential for a trade war with the US encourages the Eurozone to import more from China, aiding in offsetting inflation.
Trade relationships between the EU and the US are experiencing some progress. EU finance ministers are unified in trade negotiations with the US, aiming for improved terms.
Technical Analysis Of EUR/USD
EUR/USD trades near 1.1400 with all EMAs pointing upwards, indicating a strong uptrend. Resistance lies at 1.1500, while support is seen around 1.1200.
The EUR/USD pair has slipped from prior highs near 1.1400, now hovering closer to 1.1330, following a sharp bounce in the greenback. This retracement is largely a response to stalling risk appetite and broader macro concerns in the United States. The pair seems to be struggling to revisit its earlier peak of 1.1474. What’s driving this? A growing belief that the US economy could be slipping into stagflation—a mix of persistent inflation, slowing growth, and faltering job dynamics—has begun weighing on broader sentiment.
From a technical perspective, we’re still seeing the pair supported by a strong upward structure: all exponential moving averages remain firmly aligned to the upside. That said, near-term strength in the Dollar Index—now back up to around 100.00 after dipping to 99.00—has prompted caution. A notable shift in investor mood can be seen in the University of Michigan’s latest read on consumer sentiment, which slid to 50.8 in April. That’s the lowest point since mid-2022 and aligns with growing concern about future purchasing power and economic direction in the United States.
We’ve also been watching trade developments between the US and China closely. Fresh retaliatory tariffs out of Beijing—raising levies on certain US imports to as much as 125%—may further upend global trade assumptions. This tit-for-tat escalation doesn’t just hit exporters. It could dent incentives for new capital expenditure. If left unchecked, growth forecasts will need to be revised downward.
On this side of the Atlantic, the European Central Bank has telegraphed a forthcoming rate cut, widely expected to be 25 basis points, bringing the benchmark to 2.25%. While a cut would usually weigh on the common currency, this context is more nuanced. It comes together with internal eurozone cohesion on trade matters. In light of the brewing tensions between Washington and Beijing, EU financiers are reconsidering supply chain dependencies. A greater openness to Chinese imports could help manage inflationary pressures without over-relying on broad monetary loosening.
Goodwill in EU–US trade efforts has also added an underlying layer of stability. Finance ministers from across the bloc have signalled alignment in negotiating better trade terms. That doesn’t remove all risks to EUR/USD, but it does carve out softer ground underneath spot prices.
From where we stand, the area around 1.1500 presents a sizeable resistance ceiling. We would not expect that level to break unless macro data—especially out of the US—provides reprieve from current concerns. On the lower end, the 1.1200 region offers reliable structural support. Price movement inside this band will likely hinge on how stagflation fears in the US unfold, and whether the Dollar finds further strength off the back of it.
In positioning terms, directional plays on breakout moves should be approached with discretion, especially as the currency pair traverses key levels in an environment heavy with headline risk. Given the recent volatility in consumer outlook and trade dynamics, we’ll be favouring reactivity over anticipation.
