The EUR/USD forecast experienced an uplift as Donald Trump adopted a softer tone on tariffs during his speech at the World Economic Forum in Davos. This shift in rhetoric, coupled with economic data signaling a potential softening in the US labor market, has bolstered the euro against the US dollar.

Trump’s Softer Tariff Stance
Trump eased concerns regarding tariffs, calming investor sentiment.
His remarks included an intent to lower interest rates and crude oil prices, creating a favorable environment for riskier currencies like the euro, yuan, and Canadian dollar.

US Jobless Claims Indicate Labor Market Cooling
Jobless claims rose to 223,000, exceeding expectations of 220,000 and last week’s 217,000.
This second consecutive rise hints at potential short-term weakening in the US labor market.

Technical Analysis Supports Bullish EUR/USD Outlook
The euro recovered from earlier losses, forming a hammer candle on the daily chart, signaling a potential bullish reversal.
Recent price action broke a bearish trend line and pushed above the 21-day exponential moving average and the pivotal resistance zone of 1.0300 to 1.0340.
The EUR/USD appears to have established a bottom near 1.0200, providing further bullish momentum.

Outlook for EUR/USD
The combination of Trump’s softer tariff rhetoric and weakening US economic data points to continued support for the euro in the near term. If bullish technical signals hold, the EUR/USD pair may continue to rise, testing resistance levels above the 1.0340 zone.

Traders should monitor upcoming economic data and geopolitical developments to confirm the sustainability of this upward trend.

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