The EUR/USD currency pair climbed close to the 1.0400 mark on Tuesday amid a weakening US Dollar, continuing its third consecutive session of gains. The Euro’s rally was supported by positive inflation data from Europe, while traders anticipated key US economic reports and Federal Reserve updates later in the week.
During Asian trading hours, the Euro gained momentum against the US Dollar, bolstered by subdued performance in the Dollar Index (DXY), which tracks the Greenback’s value against six major currencies. The DXY was trading around 108.20, pressured for the third straight session. Later in the day, markets awaited the release of the US ISM Services PMI, while Federal Reserve minutes from December’s policy meeting are set for release on Wednesday.
The US Dollar faced additional headwinds after President-elect Donald Trump dismissed reports that his administration might scale back proposed tariff policies. Trump clarified that his tariff strategy would remain intact, contrary to speculation about a more limited approach targeting critical imports. His comments could provide some support for the Dollar as markets assess the broader implications of his trade policies.
Upcoming Economic Calendar of EU or US
Meanwhile, the Euro strengthened on the back of better-than-expected inflation data. Germany’s Consumer Price Index (CPI) rose to 2.6% in December, surpassing forecasts of 2.4% and marking its highest level in nearly a year. The uptick in German inflation, coupled with stronger PMI data from Spain, Italy, France, and Germany, reinforced expectations that the European Central Bank (ECB) would maintain a cautious approach to interest rate adjustments.
Traders are also closely monitoring preliminary Eurozone Harmonized Index of Consumer Prices (HICP) inflation data for December, due on Tuesday. The report is expected to provide further insight into the ECB’s monetary policy trajectory as inflationary pressures remain a key focus for European policymakers.
With both the Eurozone and the US poised for crucial economic releases this week, market participants are bracing for potential volatility in the EUR/USD pair.