EUR/USD moves upward on Monday, increasing by over 0.40% as traders move away from the US Dollar due to a decline in risk appetite. This shift follows Trump’s decision to intensify the US-European Union trade conflict, influenced by the White House’s interests in Greenland. The pair is currently trading at 1.1642, having recovered from daily lows of 1.1576.
The EUR/USD pair experiences a rally exceeding 0.40% as market participants move away from the Dollar in response to intensifying trade tensions between the US and the EU. Trump’s tariff threats have reignited concerns over a trade war, leading to a risk-off sentiment permeating global markets. Attention shifts to the EU’s strategies for retaliation and the key discussions emerging from Davos as the Federal Reserve enters its blackout phase.
> The Euro experiences a significant rebound as concerns over tariff threats related to Greenland lead to increased risk aversion: The financial markets commenced the week exhibiting a risk-averse sentiment following the White House’s implementation of effective tariffs on February 1 against eight European nations, contingent upon the US being permitted to purchase Greenland. US President Donald Trump reiterated that without an agreement, Denmark, Norway, Sweden, France, Germany, the Netherlands, and the UK will encounter significantly increased duties starting June 1. In the wake of Trump’s decision, the Dollar experienced a significant decline, mirroring the reaction observed when the White House declared April’s 2 Liberation Day last year. The US Dollar Index, which measures the dollar’s performance against a group of six currencies, has decreased by 0.32%, now standing at 99.06. In addition to this, the US economic calendar showed no significant entries. It is important to highlight that Federal Reserve officials have entered their blackout period in anticipation of the January 27-28 meeting. In Europe, the EU is contemplating retaliatory measures, which encompass the imposition of €93 billion tariffs on American goods. Recently, inflation data fell below the 2% threshold set by the European Central Bank, indicating that interest rates are likely to stay unchanged throughout the year.
Latest FX Rate Trends: Euro strengthens as Trump’s actions diminish Dollar’s safe-haven attractiveness
- The announcement from US President Donald Trump revealed the implementation of 10% tariffs starting February 1, affecting eight nations: Denmark, Norway, Sweden, France, Germany, Finland, the Netherlands, and the UK. The imposition of duties will occur in the absence of an agreement regarding the annexation or purchase of Greenland. He reaffirmed his position, stating that tariffs would increase to 25% on June 1 unless agreements are reached.
- The European Union is reportedly preparing counter-tariffs on US goods amounting to €93 billion and is considering measures that would limit access for American companies to the European market, indicating a strong reaction to Washington’s recent trade actions.
- In December, inflation in the Euroarea decreased from 2.1% to 1.9%, falling short of the anticipated 2% mark. For the first time since May of the previous year, inflation has fallen below the ECB’s target. According to Eurostat, underlying inflation, which excludes food and energy, decreased from 2.4% to 2.3%.