EUR/USD price prediction: Triple top pattern and RSI signal more downside ahead
The pair fell below last weeks low
EUR/USD price has reversed the bullish course of this month after failing to break above the critical 1.0530 resistance level that has held since late last year while forming a triple top pattern. The pair has now dropped below its 50-day EMA at 1.0440 and the previous week’s low of 1.0400.
The bearish momentum continued into today’s Asian session, pushing the pair further to 1.0380 before recovering slightly to reclaim the 1.0400 handle in the European session.
A key factor driving the recent weakness in the Euro is renewed US-EU trade tensions. US President Donald Trump has hinted at imposing reciprocal tariffs on the European Union as early as April. This has sparked fresh concerns over a potential US-EU tariff war, which could weigh heavily on the already fragile Eurozone economy. The Euro continues to struggle with weak demand, making it vulnerable to further downside pressure.
EUR/USD price dynamics (Jan 2025 - Feb 2025). Source: TradingView
Meanwhile, the US Dollar Index (DXY) strengthened following the release of US Gross Domestic Product (GDP) data on Thursday, adding to the downward pressure on EUR/USD. The stronger dollar, combined with risk-off sentiment in global markets, has fueled selling pressure on the Euro.
EUR/USD price forecast: Bearish momentum builds ahead of PCE inflation report
Later today, the US Core PCE Price Index for January will be released, providing fresh insight into inflation trends. The report is projected to show a monthly increase of 0.3%, up from the previous 0.2%. Given that this is the Federal Reserve’s preferred inflation gauge, a higher-than-expected reading could further support the USD and push EUR/USD lower. However, signs of softening inflation could reduce market expectations of prolonged Fed hawkishness, limiting the pair’s downside.
Market pricing currently reflects a 68% probability that the Fed will cut rates in June after holding steady in March and May, according to the CME FedWatch tool. So if the inflation data aligns with these expectations, EUR/USD could find some short-term relief.
On the other hand, technical indicators suggest further downside risks for the pair. Both the daily and 4-hour RSI remain in bearish territory, reinforcing the potential for additional losses. If EUR/USD fails to sustain above the 1.0400 level, the next key support lies at the critical 1.0330 support level.
The euro faced pressure after President Trump announced plans for a 25% tariff on Eurozone imports. EUR/USD got stuck between 1.0460 and 1.0530, failing to break higher.
