**EUR/USD Cracks Under Tariff Pressure and Upcoming CPI Threats: Will the 1.1500 Breakdown Happen?**
*By Trading News Staff*
[Original article by TradingNews.com](https://www.tradingnews.com/news/eur-usd-cracks-under-tariff-pressure-and-cpi-risk-eyes-11500-breakdown)
The euro’s recent fragility against the US dollar has caught the attention of global forex markets. The EUR/USD currency pair is under increasing stress as investors confront a convergence of major macroeconomic headwinds. Among these pressures, renewed tariff threats and mounting expectations surrounding the next Consumer Price Index (CPI) release in the US have shifted sentiment sharply bearish. Traders and investors now have their eyes firmly set on one crucial technical level — the 1.1500 support zone — as downside momentum gains traction.
Below is a deep dive into the current forces acting upon the EUR/USD pair, the potential outcomes ahead, and the technical picture surrounding the euro-dollar dynamic.
## Key Market Drivers Impacting EUR/USD
Several factors are weighing heavily on the euro and strengthening the dollar. Decision-makers, institutions, and retail traders alike are closely watching the following themes:
### 1. Renewed Tariff Tensions
Trade tensions between the United States and key economic partners, including the European Union, have resurfaced. With discussions surrounding fresh import tariffs, particularly in the automotive and technology sectors, the euro is becoming more vulnerable.
– The United States Trade Representative (USTR) is reportedly considering implementing new duties on a wider grouping of European imports.
– Ongoing global supply chain concerns continue to give US lawmakers leverage in revisiting earlier tariff proposals.
– The euro is seen as particularly sensitive to global trade disputes, given the EU’s heavy reliance on exports to drive economic growth.
These emerging protectionist undertones have fueled risk-off sentiment in currency markets, favoring the USD as a safe-haven asset.
### 2. US Inflation and CPI Risks
Traders are increasingly cautious ahead of the upcoming US CPI report. Inflation data is one of the most watched macro indicators by the Federal Reserve, and any upward surprises in CPI could recalibrate expectations for US interest rate policy.
– Current market consensus forecasts YoY CPI growth near 3.2 percent, with core CPI expected to climb nearly 0.4 percent MoM.
– Strong inflation data would strengthen the case for the Federal Reserve to maintain higher rates for longer. A reiteration of the “higher for longer” narrative favors USD appreciation.
Investors rebalancing positions in anticipation of the CPI print are adding additional pressure on the euro.
### 3. Interest Rate Divergence Between Fed and ECB
The policy gap between the Federal Reserve and the European Central Bank (ECB) continues to widen:
– The Fed’s recent statements suggest a hawkish tone despite a slowing economy, as inflation remains sticky.
– The latest ECB remarks, however, have highlighted declining inflation in the eurozone. There is now growing speculation that interest rates in Europe may be cut earlier than expected to support weakening growth.
– Diverging monetary policy paths historically act as a central influence over exchange rate movements. Dollar strength is often correlated with relatively tighter US monetary policy.
With the Fed signaling a “pause but vigilant” stance and the ECB hinting at dovish moves ahead, this imbalance has led to renewed bearish sentiment toward the euro.
## Technical Analysis: A Breakdown Below 1.1500?
Technically, the EUR/USD pair is approaching critical territory as traders gauge if the 1.1500 level will hold or break. Chart patterns, momentum indicators, and volume metrics all paint a cautiously bearish outlook.
### Current Chart Overview
– The pair recently breached the 50-day moving average and is hovering near the lower boundary of its three-month trading channel.
– RSI (Relative Strength Index) indicators are trending lower, signaling growing downside momentum.
– MACD (Moving Average Convergence Divergence) shows
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