BUZZ-COMMENT-EUR/USD longs may need Trump to ride to their rescue
Jan 31 (Reuters) - EUR/USD fell to an 8-session low near short-term structural support near 1.0350 on Friday, putting longs at risk and potentially in need of help from U.S. President Donald Trump.
Investors positioned long EUR/USD hope the European Union is spared from any U.S. tariffs on imports for as long as possible, as this might improve Europe's economic growth outlook.
Trump has threatened to impose 25% tariffs on Canadian and Mexican imports within hours, but has only fleetingly mentioned the EU since his return to the White House last week.
Economic reports out of the euro area, meanwhile, could leave the door open to the European Central Bank cutting interest rates deeper than currently expected.
A large downside surprise to German December retail sales and below estimate January month-on-month CPI combined with below estimate French January CPI to help drive euro area interest rates lower.
U.S. December PCE met estimates and consumption increased significantly.
The reports helped increase the dollar's yield advantage over the euro as German-U.S. spreads US2DE2=RR hit their widest since January 14, while terminal rate spreads for the Fed SRAM26 and ECB FEIZ5 hit -188bps, the widest since January 23.
An unexpectedly early imposition of U.S. tariffs on EU imports could drive U.S.-German spreads wider and prompt selling of the euro - with 1.00 among EUR/USD bear targets.
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