EUR/USD trade turns political, 1.2280 eyed, bulls in charge as dollar sinks

• EUR/USD bulls take charge and hunt down 1.2280 through 21-4hr SMA.
• EUR/USD lifted as dollar sinks on Trump's tariff headlines.

EUR/USD was pressured from the off in NY on Thursday, handed over to traders EUR/USD -0.08% wearing a strong dollar, although the DXY struggled by the 55-DMA and bears could not get through key supports. 

EUR/USD got a lift in the day after demand came in at early session loss of 1.2150 when Powell's comments in the 2nd round of his testimony were not considered by markets as hawkish as they were on Tuesday allowing for a rise in stocks and EUR/JPY to bring the euro back above water on the 1.22 handle again. 

Trump's protectionist-tariff announcements send markets into a sea of RED

EUR/USD was lifted again as the dollar declined and stocks tumbled, this time lead by fears over Trump's announcements of tariffs on imported steel and aluminium that could be considered as detrimental to US corporations and consumers. 

This move has not been supported by members of Congress including many Republicans and reportedly also staff within the White House who had been voicing concerns over this during the week and is ultimately weighing on the dollar as risk sours. But, of course, it is not just members of the Whitehouse and US business leaders whose feathers have been ruffled, but European Commission president Juncker said that the EU will “bring forward in the next few days a proposal for WTO-compatible countermeasures against the US.” 

Elsewhere...

In respect to Fed chairman Powell’s Senate appearance on Thursday, it was much of the same in respect to his assessment of the US economy and outlook for interest rates, although he was less bias in this round of Q&A and there was even a hint of dovishness when he was saying that he sees no strong evidence of a decisive move up in wages. 

As for US data, this came in positive on the session and risk rallied on the back of the Feb manufacturing ISM that rose from 59.1 to 60.8 to a fourteen-year highs. The core PCE deflator rose 0.3%, matching expectations for a slightly above monthly trend pace, although the annual rate remained at 1.5%. Jobless claims fell 10k to a 48-year low of 210k last week, personal incomes rose more than expected, +0.4%, boosted by tax cuts and 

More political risks

Looking ahead, markets will be focused on the outcome of this weekend's Italian general election. The polling leans towards there being a hung parliament where markets are expecting that a centre-right coalition – including Silvio Berlusconi’s Forza Italia is likely to form a government and succeed the centre-left coalition.

EUR/USD levels

Valeria Bednarik, chief analyst at FXStreet explained that the price on the 4 hours chart is developing below a strongly bearish 20 SMA, currently at 1.2240, while technical indicators bounced from oversold readings, but remain well into negative territory: "The bearish pressure may ease on a steady recovery above 1.2240, the immediate resistance, but the pair would need to advance beyond the 1.2300 level to become more attractive for EUR bulls," Valeria added.