EURUSD awaiting Europe’s response to US tariffs

The EURUSD rate is testing a key support level, with the price currently at 1.0305. Find more details in our analysis for 11 February 2025.

EURUSD forecast: key trading points

• Donald Trump imposed 25% tariffs on all US steel and aluminium imports
• Inflation in the eurozone was 2.5% in January, with core inflation remaining at 2.7%
• Expectations of an ECB interest rate cut put pressure on the euro
• EURUSD forecast for 11 February 2025: 1.0250 and 1.0165

Fundamental analysis

The EURUSD rate remains under pressure after Donald Trump imposed 25% tariffs on steel and aluminium imports. The announcement of new retaliatory tariffs has fuelled concerns about a global trade war that could accelerate inflation and limit the Federal Reserve’s ability to cut interest rates further, which supports the growth of the US dollar.

In response, Germany’s chancellor threatened that Europe would retaliate immediately if the US imposes tariffs against the EU. Meanwhile, markets are pricing in an ECB interest rate cut as inflation in the eurozone reached 2.5% in January, with core inflation remaining at 2.7%. According to today’s EURUSD forecast, such expectations exert pressure on the euro.

At the same time, US inflation expectations for the year remain at 3.0%, while five-year forecasts have risen to 3.0%. There are increasingly more preconditions for a rise in petrol, food, healthcare, rent, and housing prices. Meanwhile, projected growth in household income accelerated slightly, while expectations for increased consumer spending fell to their lowest level since 2021.

EURUSD technical analysis

The EURUSD rate remains in the downtrend. The price is currently consolidating and is likely to undergo a bullish correction towards the EMA-65 line, where the buyers will encounter strong resistance and the price could test the upper boundary of the descending channel. The EURUSD forecast for 11 February 2025 suggests a rebound from the EMA-65, followed by a decline to 1.0165.

The Stochastic Oscillator confirms a further fall in the EURUSD pair. The oscillator values have left the oversold area, and the intersection of the %K и %D lines from top to bottom signals sales. However, the 20 level is too close, so the decline could be short-lived. A breakout below the lower boundary of the bullish channel will confirm a fall, with the price consolidating below 1.0250.

An alternative scenario is possible if the buyers gain a foothold above the 1.0365 resistance level, indicating a breakout above the upper boundary of the descending channel. In this case, a bullish correction is expected, with the EURUSD quotes likely to rise to 1.0435.

Summary

The EURUSD rate is under pressure due to the threat of a trade war and expectations of an ECB interest rate cut amid rising inflation in the eurozone. At the same time, the US inflation outlook remains stable, bolstering the US dollar. The EURUSD technical analysis suggests a continuation of the downtrend to the 1.0250 and 1.0165 levels. An alternative scenario is possible if the buyers gain a foothold above 1.0365, after which the price is expected to rise to 1.0435.