EUR/USD Outlook: Key Risks from Ukraine, Tariffs, ECB, and NFP

EUR/USD traders are facing a week filled with uncertainty, as global political and economic developments come into play.

A heated exchange between Ukrainian President Volodymyr Zelensky and former U.S. President Donald Trump has clouded the prospects of a swift resolution to the Ukraine crisis, rattling investor sentiment.

Meanwhile, the potential impact of fresh U.S. tariffs on European goods and key economic releases—including the European Central Bank (ECB) rate decision and the U.S. Non-Farm Payrolls (NFP) report—will be pivotal in determining the direction of the currency pair.

After a volatile session, EUR/USD dipped to 1.0360 on Friday, ending its second consecutive week in the red. Hopes for a peace deal that previously supported the euro have now faded, increasing bearish pressure.

Key Events to Watch

ISM Services PMI

Recent U.S. economic data has shown weaknesses, with consumer sentiment and housing market figures falling short of expectations. The S&P Global Flash Services PMI unexpectedly dipped into contraction, raising concerns over economic slowdown.

A weak ISM Services PMI reading could reinforce speculation of Fed rate cuts, potentially weakening the USD.

ECB Rate Decision & Press Conference

The ECB faces tough policy choices, with members divided over how aggressively to cut rates.

While some push for a 2% rate target by summer, others remain cautious about cutting below 2.5%. A 25bps rate cut to 2.65% is expected, but traders will focus on ECB President Christine Lagarde’s comments for forward guidance, especially given concerns over inflation and U.S. trade policy.

U.S. Non-Farm Payrolls (NFP) Report

Last month’s NFP report surprised markets with solid wage growth (+0.5% m/m), reducing expectations of early Fed rate cuts.

This time, analysts expect 156K new jobs and a steady 4.0% unemployment rate. If wages rise more than expected, the USD could strengthen, delaying rate cuts. A weaker print, however, may boost the euro.

Ukraine Crisis & Trade War Risks

Geopolitical concerns are mounting as U.S. tariffs on European goods take effect. Any delays or reductions in these tariffs could benefit the euro, while further trade tensions would likely drive investors toward the safe-haven USD.

EUR/USD Technical Analysis

• Support Levels: 1.0300, 1.0250

• Resistance Levels: 1.0450, 1.0500

• Short-term Bias: Bearish, as economic risks and geopolitical uncertainty weigh on the pair.

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Conclusion

EUR/USD is set for a volatile week with key events such as the ECB rate decision, NFP, and U.S. tariffs all playing a role. Traders should stay alert and prepared for potential market swings.

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