Euro Holds Firm Near 1.1700 as Trade Tensions With U.S. Intensify

The EUR/USD pair remains steady near the 1.1700 level during Tuesday’s Asian session, building on its recovery from Monday. The euro continues to find support amid escalating trade tensions between the United States and the European Union, which have weighed on the U.S. Dollar’s recent momentum.

The U.S. Dollar Index (DXY) has pulled back from its recent highs, trading flat around 97.88 after retreating from near 99.00. The decline reflects growing investor caution as geopolitical risks mount.

Tensions flared after a report from the Wall Street Journal revealed that U.S. President Donald Trump is now pushing for a baseline tariff hike on EU imports—from the previously discussed 10% to a more aggressive 15–20%. Trump has also reportedly shown no willingness to reduce the 25% tariff on European automobiles.

In response, the European Union has stepped up its preparations for retaliatory measures. Germany, traditionally more reserved in such disputes, has now joined France and other member states in advocating for a tougher approach. As reported by Bloomberg, one German official was quoted saying, “If they want war, they will get war,” indicating the bloc’s resolve to push back.

Meanwhile, investors are closely eyeing this week’s European Central Bank (ECB) meeting. Markets widely expect the ECB to leave interest rates unchanged, but attention will be focused on President Christine Lagarde’s press briefing for any clues on future rate paths amid a still-fragile eurozone recovery.

On the U.S. side, expectations remain firm that the Federal Reserve will also hold rates steady in its upcoming policy meeting next week. The Fed’s cautious approach, coupled with rising trade uncertainties, is keeping the dollar under pressure.

As both central banks maintain a steady hand, traders will be watching for any surprises in policy guidance or geopolitical developments that could influence the next move in EUR/USD.

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