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EUR\/USD gives up some gains and drops\u00a0to near 1.0400 from the intraday high of 1.0440\u00a0as the US Dollar (USD) rebounds in Thursday\u2019s North American\u00a0session. The US Dollar<\/a> bounces back as\u00a0United States<\/a> (US) President Donald Trump reiterates threats to impose reciprocal tariffs in a post on his Truth Social account. “Three Great Weeks, Perhaps The Best Ever, But Today Is The Big One: Reciprocal Tariffs!!! Make America Great Again!!!,” Trump said.<\/p>\n On Wednesday, the White House reported that Trump is\u00a0expected to announce reciprocal tariffs before meeting with Indian Prime Minister\u00a0Narendra Modi on Thursday.<\/p>\n The impact of reciprocal tariffs will be negative for the Eurozone economy.\u00a0Reciprocal tariffs would result in an increase\u00a0in tariffs on imports of European vehicles to 10%\u00a0 from the current 2.5% levy. The US is the second-largest market for the European Union (EU)\u00a0 automobile exports after the United Kingdom (UK). Over 20% of total EU auto exports were taken by the US in 2023, according to ACEA.\u00a0<\/p>\n This scenario would result in\u00a0a trade war between Europe and the US as\u00a0European Commission President Ursula von der Leyen warned on Tuesday that the EU would act to \u201csafeguard its economic interests\u201d and is ready for \u201cproportionate countermeasures.\u201d Her comments came after Trump imposed 25% tariffs on all imports of steel and aluminum and said these tariffs \u201cwill not go unanswered\u201d.<\/p>\n Meanwhile, the outlook of the Euro is already vulnerable\u00a0due to weak Eurozone economic performance and firm expectations that the European Central Bank<\/a> (ECB) will extend the monetary easing cycle as inflationary pressures are on track to return sustainably to the 2% target by the year.<\/p>\n On the monetary policy front, ECB policymaker and\u00a0Governor of the Croatian National Bank Boris Vuj\u010di\u0107 said in an interview with Reuters that market expectations for three more interest rate cuts this year are not “unreasonable”.\u00a0Vuj\u010di\u0107 added that the ECB could remove the reference to ‘restrictive policy’ already in the March policy statement<\/a> and explained that rate cut predictions are based on expectations for a “quick fall in services inflation” in the coming months. <\/a><\/p>\n EUR\/USD extends its winning streak for the third trading day on Thursday. The major currency pair climbs above 1.0400 and gives a tough fight to\u00a0the 50-day Exponential Moving Average (EMA), which trades\u00a0around 1.0424.<\/p>\n The 14-day Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, indicating a sideways trend.<\/p>\n Looking down, the January 13 low of 1.0177 and the round-level support of 1.0100 will act as major support zones for the pair. Conversely, the psychological resistance of 1.0500 will be the key barrier for the Euro<\/a> bulls.<\/p>\n The Producer Price Index ex Food & energy released by the Bureau of Labor statistics, Department of Labor<\/a> measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Those volatile products such as food and energy are excluded in order to capture an accurate calculation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).<\/p>\n
The major currency pair surrenders some gains<\/p>\nDaily digest market movers: EUR\/USD surrenders some gains\u00a0as Trump reciprocal tariffs linger<\/h2>\n
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Technical Analysis: EUR\/USD struggles around\u00a050-day EMA<\/h2>\n
Economic Indicator<\/h2>\n
Producer Price Index ex Food & Energy (YoY)<\/h3>\n