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• EUR/USD scorched the charts on Wednesday, rising 1.75%.
• Markets are tilting into the bullish side ahead of the ECB’s latest rate call.
• Key US NFP figures still loom ahead, but tariff pivots are a welcome relief for markets.

EUR/USD surged on Wednesday, climbing 1.75% and knocking on the 1.0800 handle as risk sentiment rises following yet another pivot from US President Donald Trump on his own tariff strategy. President Trump is once again pumping the brakes on his own trade strategy of threatening to impose stiff import taxes on his own citizens in order to punish other countries for a litany of Donald Trump’s perceived slights.

The European Central Bank (ECB) is set to trim interest rates by another 25 bps on Thursday, taking the Main Refinancing Operations Rate down to 2.65% and dropping its Rate on Deposit Facility to 2.5%. Despite an overall tone of weak or lopsided growth permeating the EU’s economic dataset in the first quarter, rate traders have trimmed their bets of additional ECB rate cuts through the rest of the year as inflation continues to prove to be more of a problem than central planners anticipated. Rate markets now see less than 70 bps in rate cuts for the remainder of 2025.

The US ADP Employment Change for February showed only 77K new jobs, significantly below the forecast of 140K and March’s 186K. Nonetheless, the ADP results have consistently failed to correlate with Nonfarm Payrolls (NFP) since a reporting change in 2022, indicating that the weak performance holds little significance.

This week, the Trump administration announced a one-month delay on tariffs for the automotive sector, which heavily relies on foreign trade. This exemption was retroactively declared as Trump’s team aims to impose tariffs on trading partners without negatively impacting the US economy.

This Friday’s US Nonfarm Payrolls (NFP) report is the key focus for traders this week. US net job additions are projected to rebound slightly in February to 160K, up from January’s rather unremarkable 143K figure.

EUR/USD price forecast
 

EUR/USD’s Wednesday rally saw Fiber put in its single best trading day in years, rising 185 pips in a single session and rising into touch range of the 1.0800 handle, a price level the pair hasn’t seen since early November 2024. The pair barely noticed the 200-day Exponential Moving Average (EMA) at 1.0640, with EUR/USD crashing through the key moving average on an intraday basis.

EUR/USD has risen 4% in three days, pushing into 17-week highs as price action goes one-sided this week. However, bulls could be poised to get caught with their hands in the cookie jar: technical oscillators remain in overbought territory, and a downside snap could drag bids back to the 200-day EMA before a new bullish trend is able to kickoff in earnest.

EUR/USD daily chart
 

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