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EUR/USD corrects lower after revisiting a two-week high of 1.0430 as the US Dollar pares some of Monday’s losses. The US Dollar rebounds as Donald Trump confirms that the tariff hike plan remains afloat. Trump aims to fix the trade imbalance with  Europe, which would keep the Euro on the backfoot. EUR/USD corrects lower to near 1.0350 in Tuesday’s European session after surging to 1.0430 on Monday. The major currency pair faces pressure on Tuesday as the US Dollar (USD) pares some of Monday’s losses. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back around 108.50 from its almost two-week low slightly below 108.00. The Greenback dived vertically on Monday as Donald Trump’s presidential memo lacked immediate tariff imposition on foreign countries. The memo was directing federal agencies to study trade policies and evaluate US trade relationships with China and America’s continental neighbors, the Wall Street Journal (WSJ) reported. Donald Trump clarified that the proposal of universal tariff hikes is on the table but “we are not ready for that yet”. However, he highlighted the sizeable trade deficit issue with the Eurozone. Trump said that he would remedy the trade imbalance either by “raising tariffs or  Europe buying more US oil and gas”, Reuters reported. The absence of tariff hikes by in Trump’s comments on his first day at the White House led to a strong buying in risk-sensitive currencies. The Euro (EUR) rallied almost 1.3% against the US Dollar despite fears of higher tariffs remaining intact. Daily digest market movers: EUR/USD falls back below 1.0400 amid firm ECB dovish bets EUR/USD fails to sustain above the key level of 1.0400 due to a slight recovery in the US Dollar. Market participants are divided over US Dollar’s outlook as Trump has delayed tariff…

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Filed under: News - @ January 21, 2025 10:27 am