EUR/USD remains stable within a 1.0450-1.0530 range, influenced by short-term rate differentials. Recent shifts towards a more dovish US Federal Reserve have favoured the euro, amidst concerns about US consumption.

Any upward movement in EUR/USD above 1.05 is not expected to last long. Predictions suggest that EU tariffs may be implemented in April, impacting the currency’s trajectory.

Month-end flows, especially around the 17:00 CET WMR fix, may prompt some selling of EUR/USD. Notable performance differences between eurozone equities (Eurostoxx +6%) and the S&P 500 (-1%) could also lead to portfolio rebalancing actions.

The euro remains within a confined range against the US dollar, with changes in short-term rate differentials shaping price action. The Federal Reserve’s softer tone has worked in favour of the euro, but there are concerns about how resilient US household spending will be in the months ahead.

An advance beyond 1.05 is unlikely to hold. There are expectations that EU tariffs, possibly arriving in April, could weigh on the euro. If those tariffs materialise, market sentiment will probably adjust in anticipation, keeping traders alert to policy shifts from both sides of the Atlantic.

As the month draws to a close, traders should pay attention to possible pressures arising around the 17:00 CET WMR fix. When month-end approaches, large asset managers and pension funds often rebalance portfolios, which can create waves in currency flows. With Eurozone equities having risen by 6% while the S&P 500 has slipped by 1%, adjustments going into month-end may see some selling in EUR/USD. This is something that those with short-term exposure need to factor into positioning.

From here, we must also consider how positioning in rate markets plays a role. If traders in the short-term interest rate space make a concerted shift towards expecting rate cuts from the Federal Reserve, that could briefly support the euro. However, if US data shows ongoing resilience, dollar strength could return just as quickly.

The trade in the coming weeks depends on how central banks communicate policy outlooks and how that influences expectations in rate markets. For now, the euro faces hurdles above 1.05, and external factors such as EU trade policy could soon take on greater importance.