EURUSD may decline due to increased trade barriers

The EURUSD rate stabilized near the 1.0350 level after the previous day's growth. However, the pair may be under pressure due to the Donald Trump administration's intentions to impose tariffs without Congress. This measure suggests raising duties on imports from Japan, the EU and China, as well as dealing with non-tariff barriers, such as foreign subsidies and taxes.

The Eurozone may face retaliatory measures. The EU currently has a 10% tariff on American cars, while exports of European cars to the US are subject to only a 2.5% duty. This makes the euro sensitive to Washington's possible actions.

The pair is additionally pressured by lower appetite for risky assets. Trump's recent increase in duties by 25% intensifies market uncertainty. The cautious rhetoric of Federal Reserve (Fed) Chairman Jerome Powell only strengthens expectations of more restrained rate cuts by the regulator.

As Powell said in his speech to Congress, the Fed is focused on a stable labor market and robust economic growth. At the same time, he emphasized that the Trump administration's tariff policy could boost inflation, limiting the regulator's ability to ease monetary policy further.

Investors are focused on Wednesday's release of US Consumer Price Index (CPI) data. The overall inflation rate is projected to remain at 2.9% year-on-year, while the core index may decline from 3.2% to 3.1%. These data may affect further dynamics of the currency pair.

From a technical perspective, EURUSD formed an ambiguous triangle pattern after breaking out of the downtrend on the daily chart (D1). For some time, the price may consolidate within this pattern, and its movement may accelerate after breaking through the limits of the triangle. Both Bulls Power and Bears Power indicators (standard values) are declining on the H4 timeframe, approaching the negative zone. This shows the dominance of bearish sentiments in the market.

Signal:

The short-term outlook for EURUSD suggests selling. 

The target is at the level of 1.0100.

Part of the profit should be taken near the level of 1.0250.

A stop-loss could be placed at the level of 1.0530.

The bearish trend is short-term, so a trading volume should not exceed 2% of your balance.