Trade risks and ECB policy reinforce EURUSD decline

EURUSD is declining moderately on Wednesday due to uncertainty surrounding US President Donald Trump’s trade policy ahead of imposition of new tariffs next week. 

Trump stated that not all of the discussed duties would be imposed on April 2, and some counties may get breaks. These comments boosted the US dollar. 

Meanwhile, the US consumer confidence index falling to its lowest in four years reinforces expectations of an economic slowdown. Despite such sentiment, consumers do not intend to sharply cut back on spending. However, the number of Americans who intend to by a car in the next six months has decreased, while the interest in purchasing household appliances and vacations abroad remains strong. 

Later on Wednesday, the Federal Reserve (Fed) will address the monetary policy amid persistent uncertainty. 

Friday will see the release of data on US personal consumption expenditures (PCE). The index may provide clues on the Fed’s further moves. 

The euro is under pressure after the European Central Bank (ECB) signaled monetary easing. Member of the ECB Governing Council, Francois Villeroy de Galhau, stated that the deposit rate could be cut from 2.5% to 2% by the end of the summer. It limits demand for euro and puts additional downward pressure on the currency pair. 

From the technical point of view, EURUSD is in a broad correction on the daily chart (D1). The wave structure indicates the transition from the second ascending wave to the third descending wave, as Bulls Power and Bears Power indicators (standard parameters) remain below zero. It confirms a prevalence of bearish sentiment.

Signal:

The short-term outlook for EURUSD suggests selling. 

The target is at the level of 1.0350.

Part of the profit should be taken near the level of 1.0600.

A stop-loss could be placed at the level of 1.1050. 

The bearish scenario is short-term, so a trading volume should not exceed 2% of your balance.