- EUR/USD inches up as the US Dollar weakens, with investors showing reduced concern over President Trump’s tariff threats.
- FOMC Minutes released Wednesday highlight officials' concerns over rising inflation risks.
- ECB’s Schnabel signals a likely pause in the central bank’s policy-easing cycle.
The EUR/USD pair ticks higher toward 1.0440 in Thursday’s European session, as the US Dollar (USD) weakens. The US Dollar Index (DXY), which tracks the Greenback’s performance against six major currencies, declines near 106.90. The Greenback’s downward momentum resumes after a brief recovery earlier this week, with investors less worried about President Donald Trump’s tariff policies than initially expected.
So far, Trump has imposed 25% tariffs on steel and aluminum, 10% tariffs on Chinese imports, and threatened additional 25% tariffs on automobiles, semiconductors, and pharmaceuticals by April. However, he has indicated a delay in implementing further tariffs, allowing local manufacturers time to adjust. Market experts believe negotiations with US trading partners could ease the global economic impact of these tariffs.
Beyond tariffs, growing optimism over a Russia-Ukraine truce has also contributed to the US Dollar's diminishing risk premium. Trump has agreed to hold further negotiations with Russia, Ukraine, and European leaders to end the conflict. A peace deal would benefit the Eurozone, improving global supply chains and reducing energy prices, which were heavily impacted by the war.
Market Movers: EUR/USD Strengthens Amid US Dollar Weakness
- EUR/USD gains as the US Dollar struggles, despite the hawkish FOMC Minutes, which revealed that policymakers were hesitant to ease monetary policy further due to inflation concerns.
- FOMC discussions indicated that tariff costs would likely be passed on to consumers, adding to inflationary pressures. While such a scenario typically supports the USD, the Greenback remains under pressure due to Trump’s economic policies.
- In the Eurozone, traders expect three interest rate cuts by the European Central Bank (ECB) by summer. However, ECB official Isabel Schnabel suggested that the bank may pause its easing cycle, citing high domestic inflation and elevated wage growth.
- Upcoming key events include flash PMI data for February on Friday, which will impact both the US Dollar and the Euro. On Thursday, Initial Jobless Claims data for the week ending February 14 will also be closely watched.
Technical Analysis: EUR/USD Holds Near Key Levels
EUR/USD trades within Wednesday’s range, holding steady around 1.0440 in European trading. The 50-day Exponential Moving Average (EMA) provides support near 1.0430.
The 14-day Relative Strength Index (RSI) struggles to break above 60.00—a move above this level would confirm bullish momentum.
On the downside, the February 10 low of 1.0285 serves as a key support level.
On the upside, the December 6 high of 1.0630 will act as resistance for Euro bulls.
