The EUR/USD exchange rate experienced a decline of 0.26% on Wednesday, marking its sixth consecutive day of losses. This downward trend comes amid renewed trade war tensions as the U.S. administration under President Trump continues to threaten significant tariffs. The European Union is preparing for its own response in the form of substantial counter-tariffs against U.S. imports.
On Wednesday, the EUR/USD pair fell below the 1.0750 level for the first time since early March. As concerns about escalating trade conflicts intensify, market sentiment has soured, leading to an erosion of risk appetite ahead of critical developments anticipated in early April. Reports indicate that the U.S. plans to implement a blanket tariff on copper imports, echoing the previous 25% tariffs placed on steel and aluminum. Additionally, there is speculation regarding a potential 20% tariff on automobiles, with European officials awaiting more definitive announcements from the Trump administration.
The impending “reciprocal” tariff strategy, set to be unveiled on April 2, is stirring uncertainty. This plan suggests that the U.S. would impose tariffs in retaliation for existing trade barriers implemented by other nations. Furthermore, the administration is contemplating treating value-added taxes (VAT) and luxury taxes as quasi-tariffs, potentially complicating trade relations further.
While the U.S. GDP growth figures are scheduled for release on Thursday, market analysts do not anticipate significant movement in response to these numbers. The focus will shift to the Core Personal Consumption Expenditure (PCE) inflation data expected on Friday, which may offer insight into the inflation trajectory. Projections indicate a rise in annualized PCE inflation to around 2.7% for February.
The sustained six-day slide in EUR/USD is showing signs of bearish momentum, with the exchange rate recorded almost 2% lower from last week’s peak above 1.0950. The pressure is mounting on the pair, suggesting that it may soon test the 200-day Exponential Moving Average, situated just below the crucial 1.0700 level.
