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EURUSD:
EUR/USD declines to 1.0835 during Asian trading on Friday. The euro (EUR) is weakening against the US dollar (USD) amid an escalating trade war between the United States and the European Union. Later on Friday, the German Harmonized Index of Consumer Prices (HICP) for February and the preliminary Michigan Consumer Sentiment Index for March will be released.
Late Thursday, U.S. President Donald Trump threatened to impose 200 percent tariffs on imports of wine, cognac and other alcohol from Europe. The measure was in response to EU plans to impose tariffs on U.S. whiskey and other products in April, itself a response to Trump’s 25 percent duties on steel and aluminum imports that took effect Wednesday. The latest twist in the escalating trade war is putting pressure on the common currency.
European Central Bank (ECB) policymaker and Bundesbank President Joachim Nagel said U.S. tariffs on imported goods could push Germany, Europe’s largest economy, into another recession, adding to the country’s economic woes. “We live in a world with tariffs, so we can expect a recession this year if tariffs are indeed imposed,” Nagel said Thursday.
On the other hand, weak U.S. economic data and concerns about a slowdown in the U.S. economy could weigh on the dollar and limit the major pair’s decline. Barclays analysts have adjusted their forecast on the US Federal Reserve (Fed) interest rate decisions and now expect two quarter-point rate cuts in June and September. Barclays had previously forecast one rate cut of 25 basis points (bps) in June. Short-term interest rate futures put the probability of a quarter-point Fed discount rate cut in June at nearly 75%, according to the CME FedWatch tool.
Trading recommendation: SELL 1.0850, SL 1.0890, TP 1.0765
Origin: FreshForex
