EUR/USD backslides as fresh tariff threats weigh on Euro

• EUR/USD fell 0.85% on Thursday after Trump reiterated tariff threats.
• Risk sentiment got knocked lower after Trump pivoted on his own tariff timeline.
• US data also soured, pointing toward a general slowdown and rising inflation pressures.

EUR/USD took a leg lower on Thursday, falling nearly nine-tenths of one percent and slipping back below 1.0400 for the first time in almost two weeks. A weak technical stance has been developing in the Fiber pair, and a fresh threat of US tariffs on European goods is weighing further on bids.

European tariff threats back on the forefront

Mere hours after affirming that threatened tariffs would begin in April, US President Donald Trump surprised markets by pivoting once again on when he thinks he'll be imposing import taxes on a wide swath of the US' closest trade partners. According to President Trump, tariffs aimed squarely at Canada and Mexico are still set to proceed next week, beginning on March 4.

On top of steep tariffs aimed at close US allies, President Trump took the opportunity to inform his social media followers that Europe has treated the US "very badly" on trade, possibly alluding to his administration's insistence that European VAT taxes are a sort of tariff on US goods. Further "reciprocal" tariffs are still planned to take effect in early April, with a batch of tariffs aimed specifically at the EU.

US data hints at more inflation on the cards

US GDP growth for Q4 surpassed forecasts, and Durable Goods spending increased faster than expected in January. GDP rose to 2.4% QoQ, above the 2.2% expectation, while the annualized figure remained stable at 2.3%.  

Durable Goods Orders surged to 3.1% MoM in January, exceeding expectations of 2.0% and recovering from a revised -1.8%. However, much of this increase results from businesses stocking up ahead of possible tariffs, and rising inflation may be artificially inflating the figures, posing future challenges. The increase in Durable Goods Orders primarily came from the transportation sector due to a surge in Boeing bookings and automotive vehicles. Excluding these factors, orders were flat at 0.0% in January, missing the 0.3% forecast and falling short of the revised 0.1%.  

US PCEPI inflation data is expected Friday. Thursday's preview suggests an unfavorable outlook for investors hoping the recent rise in headline inflation is temporary. QoQ Core PCE rose to 2.7%, up from the expected 2.5%.

EUR/USD price forecast

EUR/USD's Thursday downturn puts Fiber back on the bearish side of the 50-day Exponential Moving Average (EMA) at 1.0444, pushing intraday bids back below 1.0400. Momentum has pivoted sharply bearish, and price action is poised for an extended backslide to the last swing low near the 1.0300 handle.

EUR/USD daily chart