Key moments

• Tuesday saw the EUR/USD experienced a minor decline of 0.10%, but the pair continues to trade around 1.0800 at press time.
• The U.S. Dollar Index breached 104.200.
• Investors have grown increasingly wary as the Trump Administration’s tariff policies are set to come into effect this Wednesday.

Euro Holds Ground, Dollar Index Rises Before Tariff Implementation

The Euro experienced a slight downturn against the U.S. dollar, registering a decrease of approximately 0.10% on Tuesday. Despite this setback, the EUR/USD pair managed to maintain a position above the crucial 1.0800 mark, even after briefly dipping to around 1.0790. Meanwhile, the U.S. Dollar Index achieved a slight gain, surpassing 104.200.

Market participants are exercising heightened caution, primarily due to the impending implementation of tariff policies outlined by U.S. President Donald Trump. It has been stated that the new tariffs could target practically all countries that export goods to the U.S. This has intensified anxieties regarding a potential global trade war as reciprocal tariff decisions also seem to be on the horizon. The potential ramifications of these trade tensions have injected a significant degree of uncertainty into the global economic outlook, leading to a risk-averse environment.

The Euro’s performance remains relatively stagnant following the release of Germany’s latest inflation data, which was lower than expected at 2.3%. The reported easing of inflationary pressures in the Eurozone’s largest economy has fueled speculation that the European Central Bank (ECB) might proceed with further interest rate cuts. Such a policy decision could potentially weigh on the single currency, as it signals a divergence in monetary policy compared to the U.S. Federal Reserve’s stance. In response to the prevailing market uncertainties, some traders have sought refuge in the U.S. dollar due to its position as a safe-haven asset.

Central bank commentary also influences market sentiment. Representatives from the U.S. Federal Reserve have indicated that any decision to reduce interest rates further would depend on firm evidence that inflation is subsiding.

As market participants navigate these complex factors, the EUR/USD pair is expected to remain sensitive to both economic data and geopolitical developments.