The EUR/USD pair fell below 1.0400 on Wednesday, pressured by renewed US-EU trade tensions and broader dollar strength. Investors grew cautious as discussions over tariffs and trade imbalances between Washington and Brussels resurfaced, clouding the outlook for economic cooperation between the two regions.
The US dollar maintained its firm tone, supported by higher Treasury yields and speculation that the Federal Reserve may keep interest rates elevated for longer. Stronger-than-expected US economic data has reinforced the Fed’s cautious stance, reducing expectations of imminent rate cuts and keeping the greenback in demand against the euro.
Meanwhile, the euro struggled as concerns over sluggish growth in the Eurozone added to its downward momentum. Recent data has signaled economic weakness across key European economies, raising doubts about whether the European Central Bank (ECB) can maintain a restrictive policy stance for much longer. If growth prospects deteriorate further, the ECB may be forced to shift toward a more accommodative approach, adding pressure on the euro.
Trade tensions between the US and EU have further dampened investor sentiment, with reports suggesting that Washington is considering new trade measures against European goods. This comes as both regions navigate economic uncertainty and attempt to balance trade relations amid shifting global supply chains. The renewed friction has added another layer of risk for the euro, prompting investors to seek safety in the US dollar.
Despite the recent slide, some analysts believe EUR/USD could find support around the 1.0350–1.0370 range, with traders closely watching any signs of ECB intervention or shifts in US trade policy that could ease pressure on the euro. However, a sustained break below 1.0400 could open the door for deeper losses, especially if the dollar’s strength continues.
For now, the euro remains under selling pressure, with the combination of economic uncertainty, trade tensions, and diverging central bank policies keeping the dollar in control. Traders will be watching upcoming US inflation data and ECB commentary for further clues on whether the euro can stage a rebound or if further downside is ahead.
