EUR/USD Eyes 1.1400 as US Dollar Struggles on Tariff Relief Optimism

EUR/USD holds steady near 1.1400 on Monday as easing trade tensions and a weaker US Dollar support the pair.

The Euro to US Dollar exchange rate (EUR/USD) is consolidating around 1.1400 during early European hours, building on last week’s strong rally. The pair recently hit a three-year high above 1.1470, as markets reacted to tariff relief measures announced by the US government.

🔍 Key Drivers Behind EUR/USD Strength

✅ Trump’s Tariff Pause Boosts Risk Appetite

US President Donald Trump’s decision to temporarily suspend the 125% tariff on selected Chinese tech imports—such as smartphones, laptops, and hard drives—has lifted global market sentiment. While these products still face a 20% baseline tariff from earlier fentanyl-related sanctions, investors viewed the new exemptions as a de-escalation step in the US-China trade war.

📉 US Dollar Weakens Despite Improved Risk Sentiment

Despite a broader risk-on mood, the US Dollar (USD) has been unable to gain ground, pressured by falling inflation expectations and uncertainty surrounding future Federal Reserve (Fed) rate moves.

📊 EUR/USD Technical Analysis – Bulls Hold Ground

Current Price: 1.1398
Resistance Levels: 1.1400 (psychological), 1.1470, 1.1500
Support Levels: 1.1340, 1.1300, 1.1250
RSI (4-hour): Remains above 70 – indicating overbought conditions.

➡️ A confirmed break above the 1.1400 psychological barrier could trigger further gains towards 1.1470 and eventually 1.1500. However, a failure to hold this level may result in a correction toward 1.1340 or lower.

🗓️ What’s Next? Fedspeak in Focus

With no major US economic releases scheduled today, investor attention turns to speeches from Federal Reserve officials, including Philadelphia Fed President Patrick Harker. According to the CME FedWatch Tool, markets now price a 20% chance of a 25bps rate cut in May.

If Fed policymakers adopt a cautious or hawkish stance, the US Dollar may find temporary support, limiting EUR/USD’s upward momentum. On the other hand, any dovish remarks could reignite Euro bulls, pushing the pair closer to 1.1500.

🌐 Bottom Line for Traders

EUR/USD continues to benefit from a softer US Dollar and improving global risk sentiment. While the bullish trend remains intact, short-term overbought signals warrant caution. Traders should closely monitor tariff-related headlines and upcoming Fed comments for fresh directional cues.

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Yasher Rizwan