The EUR/USD pair is trading firmly near 1.1395 during Tuesday’s Asian session, buoyed by renewed optimism in transatlantic trade relations. A delay in U.S. tariff plans against the European Union has lifted the Euro to its highest level since late April, signaling bullish sentiment in the market.
The Euro gained fresh momentum after U.S. President Donald Trump confirmed a delay in the proposed 50% tariffs on EU imports, now postponed until July 9. This move alleviated immediate trade tensions and sparked hopes for a diplomatic resolution. The Euro’s upside has been further amplified by a declining U.S. Dollar Index (DXY), which has dropped below the key 99.00 threshold following weak Treasury auctions and rising U.S. debt concerns.
Low trading volumes due to the U.S. Memorial Day holiday kept volatility subdued on Monday. However, with European Central Bank (ECB) policy divergence and fresh consumer confidence data in focus, market activity is expected to pick up.
Momentum indicators show a cautiously bullish setup:
The policy path for both central banks remains a major focus for forex markets. The Federal Reserve held rates steady in its latest meeting but faces increased pressure to cut rates later in the year due to moderate inflation and fiscal instability.
Meanwhile, the ECB already reduced its deposit rate to 2.25% and is expected to remain dovish. However, ECB policymakers are still cautious. While Mario Centeno hinted at the need for sub-neutral rates to stimulate the economy, others like Isabel Schnabel and Klaas Knot emphasized the need for more data before deciding on further easing.
The EUR/USD pair continues to build strength and is testing major resistance near 1.1400. A confirmed break above this level opens the door toward 1.1572 and 1.1600. However, failure to sustain above current levels could result in a pullback toward 1.1133.
With the combination of tariff relief, a weakening USD, and ECB caution, the Euro appears poised for further gains—provided upcoming inflation and confidence data support the trend.
📌 Final Thought:
The Euro is navigating a delicate balance between external trade optimism and internal policy caution. If U.S. fiscal pressure persists and the ECB remains data-dependent, EUR/USD may continue its march toward multi-month highs.
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