FX.co ★ EUR/USD

The EUR/USD pair experienced a substantial surge on Thursday, propelled by a widespread decline in the US dollar following the Trump administration's unveiling of a unified and "reciprocal" tariff policy. This policy, designed to address trade imbalances, triggered significant market volatility and a notable shift in currency valuations. While the European economic data calendar remained relatively light, the upcoming US nonfarm payrolls report on Friday loomed large, promising to provide crucial insights into the US economy's response to the newly implemented tariffs. This report, particularly the March employment figures, was anticipated to serve as a critical barometer of the Trump administration's trade strategy's effectiveness. Adding to the prevailing market unease, the US services PMI, released by the Institute for Supply Management, plummeted to a nine-month low of 50.8. This sharp decline, marking the fastest month-on-month contraction since the onset of the pandemic, underscored the fragility of business activity and consumer confidence in the US. The imposition of tariffs further exacerbated these concerns, casting doubt on the potential for a swift recovery in market sentiment. The Trump administration's decision to announce the tariffs on "Liberation Day" drew widespread criticism, with former US Treasury Secretary Larry Summers questioning the validity of the data used to calculate the tariffs. This skepticism was reinforced by internal Trump team communications, which revealed a seemingly unorthodox methodology for determining reciprocal tariff rates. The method, involving the division of a country's net exports to the US by its imports from the US and then halving the resulting figure, led to the imposition of a 10% tariff on the uninhabited Heard and McDonald Islands, highlighting the perceived flaws in the administration's approach.

Consequently, the euro experienced a significant appreciation against the US dollar, particularly during the European session, ultimately settling around the 1.1100 level. The pair's strong upward momentum propelled it into the upper half of its daily moving average range, signaling a potentially bullish trend. While some oscillators, such as the MACD, indicated a potential sell signal, suggesting caution, the overall moving average configuration continued to support the upside. The technical outlook, therefore, remained predominantly bullish as the market transitioned into the Asian session. The Relative Strength Index (RSI) surged to 72.32, indicating overbought conditions, which could signal a potential pullback. However, other momentum indicators, including the Williams Percent Range at -18.88 and Momentum at 0.022, presented a mixed to bullish outlook, further complicating the technical picture. The confluence of these factors, encompassing both economic data releases and technical indicators, contributed to the dynamic fluctuations observed in the EUR/USD pair.