The euro against the US dollar (EUR/USD) continued its upward trend during the Asian session on Friday, closing near 1.1350 for the second consecutive day of gains. Mainly benefiting from the EU's announcement of a 90 day suspension of the new 25% tariff on the United States, buying time for trade negotiations.

Previously, the White House suddenly changed its attitude and lowered tariffs on EU exports from 20% to 10%, but the existing taxes on steel, aluminum, and automobiles remained unchanged.

The EU's easing stance has helped the euro break away from its recent weak pattern, and market sentiment has temporarily stabilized, "according to market research

In terms of interest rate expectations, the European Central Bank's interest rate cut bet has been adjusted. Investors currently expect the European Central Bank's deposit mechanism interest rate for December to be 1.8%, higher than Wednesday's 1.65% and slightly lower than the previous week's 1.9%. The expected probability of a rate cut in April has also decreased from 100% to 90%.

The market's bet on the European Central Bank's aggressive interest rate cuts has eased, reflecting slightly better than expected economic resilience in the eurozone. "- Head of Foreign Exchange Research at Credit Agricole France

Meanwhile, the US dollar continues to be under pressure. The US CPI in March increased by 2.4% year-on-year, significantly lower than the market expectation of 2.6% and the previous value of 2.8%. The core CPI was 2.8% year-on-year, lower than the expected 3.0%. On a monthly basis, CPI decreased by 0.1%, while core CPI slightly increased by 0.1%.

This continues to increase the probability of the Federal Reserve initiating a rate cut in June, with the US dollar index (DXY) falling to the line of 100.20.

In addition, the United States will release the March PPI and Michigan Consumer Confidence Index later this week, which may become new catalysts for the short-term trend of the US dollar.

On a technical level, if the EUR/USD breaks through the resistance level of 1.1375, it will further move up to the psychological level of 1.1400; The lower support position is seen at 1.1280.

Editor's viewpoint:

The EU's "temporary suspension of tariffs" strategy has released a certain easing signal, driving the short-term strength of the euro. Although the European Central Bank still faces pressure to cut interest rates this year, its loose pace has been repriced, which will help stabilize the euro.

On the other hand, under the dual pressure of weak inflation data and increasing policy uncertainty, the short-term weakness of the US dollar is likely to continue, and non US currencies may continue to benefit.