EUR/USD Technical & Macro OutlookDollar Slips as ‘Sell America’ Theme Re-Emerges

EUR/USD is firming as renewed Washington-driven volatility weighs on the US dollar. President Trump’s latest tariff threat against several European nations has revived elements of the earlier “Sell America” trade, prompting a pullback in the dollar and relative underperformance in US equity futures. The euro has responded by rebounding from its 200-day moving average, with price action now focused on whether this episode fades or extends in the days ahead.

Macro Backdrop

The immediate catalyst is President Trump’s threat to impose tariffs on eight European countries unless an agreement is reached over Greenland. While the headline is dramatic, its structure mirrors prior episodes, arriving ahead of a long weekend with implementation delayed, leaving scope for a negotiated reversal.

This pattern is consistent with the familiar playbook seen after last year’s Liberation Day tariff announcement, where the dollar weakened initially before recovering once tensions eased. Until clarity emerges, European currencies may remain supported, particularly if no rapid de-escalation materialises around the World Economic Forum in Davos.

Technical Outlook

EUR/USD initially came under pressure at the Asia open but found strong demand near the 200-day moving average. The rebound has carried the price back toward former support around 1.1620, which now acts as near-term resistance and defines the upper end of the developing range.

A sustained break above 1.1620 would shift focus toward the confluence of the December downtrend and the 50-day moving average near 1.1650. Clearing this zone would improve the technical outlook and open scope toward resistance at 1.1700 and potentially 1.1800, though a move to the latter would likely require a clear escalation in geopolitical tensions.

Failure to sustain gains above 1.1620 would keep the broader downtrend intact, with a pullback toward the 200-day moving average in play. Below there, 1.1550 marks the next downside level to watch.

Momentum indicators remain mixed. RSI and MACD are still in bearish territory, though RSI has broken its recent downtrend, suggesting downside momentum may be losing strength. In a headline-driven environment, these signals should be treated with caution.

EUR/USD Daily Chart

Key Levels

Resistance:

1.1620

1.1650

1.1700

1.1800

Support: 200-day moving average 1.1550

Bottom Line

EUR/USD has stabilised after defending its 200-day moving average, supported by renewed dollar weakness tied to tariff headlines. While the broader trend remains fragile, the near-term bias favours consolidation to modest upside as long as price holds above the 200-day average. Direction from here is likely to hinge on whether geopolitical tensions escalate or fade, with developments around Davos likely to play a central role.