Euro-to-Dollar Could Hit 1.09 in Key Tariff Week

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The Euro continues to find buying interest during episodes of weakness.

Markets are nervous ahead of the April 02 tariff announcements, yet the Euro isn't showing it, and further gains are possible in the coming days.

Having sold off from recent highs, it found a bid again last week, confirming solid interest in buying episodes of weakness.

A simpler way of putting it would be to say the Euro-to-Dollar exchange rate is in an uptrend and that we must expect an extension of recent resilience as a result.

For this simple reason, 1.09 will be in play over the next five days:

Above: EURUSD at daily intervals.

The pair trades above the nine-day exponential moving average (EMA) at 1.0815, while momentum, according to the Relative Strength Index, has perked up, with the indicator pointing higher again at 59.

It is also above the 21-day EMA (1.0770), where last week's selloff found a solid line of support.

Yet the entire setup could be flipped upside down on Wednesday when Trump announces his 'Liberation Day' tariffs, which should see significant hikes on EU imports announced.

Some major investment bank analysts think the decision could hamper global growth, hurt equity markets and reboot the Dollar.

"We remain reluctant to chase EUR/USD higher into the tariff announcement," says Francesco Pesole, FX Strategist at ING Bank.

"Our models suggest EUR/USD continues to trade around 0.5% above its short-term fair value, and at -155bp, the 2-year swap rate gap remains too wide to justify 1.09-1.10," he adds.

Also, be cautious of a "sell the rumour, buy the fact" reaction that would also bolster the USD in the event of a U.S. equity market recovery, as investors reckon we are reaching the limits of negative U.S. tariff headlines.

Yet, Tariff Headlines Have Failed to Help USD

Despite these potential reactions, it's clear the Dollar has struggled in 2025 as U.S. Trump's tariff barrage and other policy announcements have proven unhelpful for the U.S. economy.

If this reaction function stays in place, then a severe tariff announcement could well see the Euro-Dollar test and break the 1.09 level in the coming days.

Sometimes, keeping it simple is the best approach in uncertain times.

"The consensus was pricing U.S. exceptionalism through non-inflationary tax cuts financed by government efficiency and deregulation, which would have been USD positive. So far, we see a policy mix closer to a stagflationary scenario, with government spending cuts and high tariffs, which has been USD negative," says Athanasios Vamvakidis, FX Strategist at Bank of America.

U.S. Data Could Outweigh Tariff Headlines

It's a busy week on the U.S. calendar as we will get some clear indications as to how the economy is holding up under Elon Musk's DOGE cuts, volatile policy making and tariffs.

Surveys show a sharp deterioration in sentiment is underway, and we will be interested in seeing if this is impacting on other data.

If the answer is yes, then the prospect of a USD slump and a EUR/USD push to 1.09 and above becomes a real prospect.

In fact, some analysts reckon the data will be of greater importance to the Dollar than the tariff news.

"The slate of activity data on the calendar next week (i.e., ISMs, claims, NFP) may prove most meaningful for tactical direction, especially if tariffs are digested well on the day. While conviction on the data outturns is low, the weaker momentum in the soft indicators and broadly lower sentiment raises the odds that the hard data begin to follow suit," says a weekly FX briefing from Goldman Sachs.

Tuesday, April 1

📌 ISM Manufacturing PMI (Mar)

Expected: 49.8
Previous: 50.3

🔹 USD Sensitivity:
A reading below 50 indicates contraction.

Stronger-than-expected data would support USD, signalling ongoing resilience in the manufacturing sector.

A drop could raise concerns about economic momentum, mildly negative for USD.

📌 JOLTS Job Openings (Feb)

Expected: 7.69 million
Previous: 7.74 million

🔹 USD Sensitivity:
If job openings remain high, this would indicate tight labour conditions, potentially delaying Fed rate cuts and supporting USD.

A sharp drop could imply cooling demand for labour, possibly weakening USD.

Wednesday, April 2

📌 ADP Employment Change (Mar)

Expected: +119K
Previous: +140K

🔹 USD Sensitivity:
A strong print reinforces confidence ahead of NFP, supporting USD.

A significant miss may trigger caution, potentially softening USD ahead of Friday's payrolls.

📌 Factory Orders (Feb)

Expected: +0.4%
Previous: +1.7%

🔹 USD Sensitivity:
Resilient orders = strong investment demand = USD positive.
A weak result may reinforce concerns of slowing business activity.

Thursday, April 3

📌 Initial Jobless Claims (Week ending Mar 29)

Expected: 225K
Previous: 224K

🔹 USD Sensitivity:
Stable or lower claims = tight labour market, reinforcing Fed caution on rate cuts → USD support.

Higher claims = softening jobs market → mild USD weakness.

📌 Trade Balance (Feb)

Expected: -$110.0 billion
Previous: -$131.4 billion

🔹 USD Sensitivity:
A narrower deficit supports GDP tracking, potentially positive for USD.
A wider gap may imply slower net exports, modestly negative for USD.

📌 ISM Services PMI (Mar)

Expected: 53.1
Previous: 53.5

🔹 USD Sensitivity:
As services dominate U.S. GDP, this is a key growth gauge.
A reading well above 50 supports economic optimism → USD bullish.
A surprise dip could signal demand softening, weighing on USD.

Friday, April 4

📌 Non-Farm Payrolls (Mar)

Expected: +135K
Previous: +151K

🔹 USD Sensitivity:
A strong NFP print would reinforce Fed’s cautious stance, delaying rate cuts → USD strength.
A weak report could signal labour market cooling, increasing rate cut bets → USD negative.

📌 Average Hourly Earnings (Mar)

Expected: +0.3% MoM (3.9% YoY)
Previous: +0.3% MoM (4.0% YoY)

🔹 USD Sensitivity:
Sticky wage inflation supports a hawkish Fed outlook, supportive for USD.
Cooling earnings growth may ease inflation concerns, weighing on USD.

📌 Unemployment Rate (Mar)

Expected: 4.1% (unchanged)

🔹 USD Sensitivity:
Stable = neutral to mildly positive.
Surprise rise may raise concerns about labour market deterioration.

📌 Fed Chair Powell Speech (11:25 AM EST)

🔹 USD Sensitivity:
Markets will look for cues on policy direction.
Hawkish tone (e.g. "too early to cut") → USD support.
Dovish tone → increases expectations of rate cuts → USD weakness.