March 27 (Reuters) - EUR/USD hit a 16-session low Thursday before turning positive after bids ahead of the 200-DMA repelled bears, but downside risks remain on U.S. President Donald Trump's auto sector tariffs and the threat of additional levies, leaving euro bulls hoping for help from Friday's U.S. PCE data.

U.S. 2-year and 5-year inflation break evens have been rallying since mid-March. The dollar's

correlation with break evens helped EUR/USD drop over 2.0% from its March 18 high.

Investors will turn their immediate focus to U.S. February PCE. Month-on-month core PCE is estimated at +0.3% versus January's +0.3% while year-on-year is estimated at +2.7% after 2.6% printed in January.

Should the results surprise to the downside EUR/USD longs may get a boost. Downside results could turn the Fed's focus towards potential slower growth instead of inflation, potentially allowing policymakers to lean dovish. In such a scenario, German-U.S. spreads and terminal rate spreads for the Fed and ECB would narrow, diminishing the dollar's yield advantage and facilitating a resumption of EUR/USD's uptrend off the Feb. 3 low. On the other hand, an upward PCE surprise could help drive EUR/USD below the 200-DMA and 1.0500.
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(Christopher Romano is a Reuters market analyst. The views expressed are his own)