EUR/USD Drops as US Delays Tariffs for 90 Days – Forex Market Reacts

The EUR/USD pair fell during Monday’s trading session, dropping near 1.0880 before recovering slightly to 1.0940, still down 0.25% as the US Dollar (USD) strengthened. The move followed reports that the US may pause new tariffs for 90 days on most trading partners—excluding China—easing immediate trade war fears but keeping forex markets volatile.

Why Is EUR/USD Falling? US Tariff Delay Boosts Dollar

The USD gained strength, pushing the EUR/USD exchange rate lower, after Reuters reported that President Trump is considering a 90-day tariff delay for key allies. While the White House hasn’t confirmed the plan, the potential pause could give nations time to negotiate and avoid steep import duties.

• US Dollar Index (DXY) rose to 103.20, reinforcing USD demand.
• Trump’s earlier tariff threats had rattled markets, but a delay could stabilize trade tensions.
• JP Morgan warned US GDP could shrink 0.3% if full tariffs were imposed.

Trump’s Trade War Comments & Fed Rate Cut Pressure

President Trump dismissed market concerns over tariffs, stating:

“Sometimes you have to take medicine to fix something.”

He also urged the Federal Reserve (Fed) to cut interest rates, claiming:

• Oil and food prices are down
• No inflation risks
• US earning billions from existing tariffs

However, Fed Chair Jerome Powell warned that tariffs could spur inflation and slow growth, keeping rates steady at 4.25%-4.50% for now.

ECB Rate Cut Expectations Weigh on Euro (EUR)

The Euro’s decline was also driven by:

• ECB signals more rate cuts – Traders expect another reduction on April 17, possibly lowering rates to 2.25%.
• Weak Eurozone retail sales – Only 0.3% growth in February (below forecasts).
• ECB’s Schnabel warns of “dramatic uncertainty” from US tariffs.

EUR/USD Technical Analysis: Key Levels to Watch

• Support:
  • 1.0886 (10-day EMA)
  • 1.0850 (March 31 high)
• Resistance:
  • 1.0938 (November 5 high)
  • 1.1214 (September 25 peak)

The RSI remains above 60, suggesting bullish momentum could return if the pair holds support.

EU Seeks Tariff Negotiations – Will It Help EUR/USD Recover?

The European Commission is pushing for trade talks, offering “zero tariffs on cars and industrial goods” to avoid a full-blown trade war. If negotiations progress, the EUR/USD pair could stabilize.

Forex Outlook: Will the Dollar Keep Rising?

• Short-term: USD strength may continue if tariff delays ease economic fears.
• Long-term: More ECB rate cuts could keep the Euro under pressure.

Traders will watch:
✔ Fed & ECB policy signals
✔ US-EU trade negotiations
✔ Key technical levels (1.0850-1.1214 range)