EUR/USD Price Forecast: Trump escalates tensions, US Dollar plunges
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UPGRADEEUR/USD Current price: 1.1729
- US President Donald Trump keeps threatening tariffs on those opposing his projects.
- The German ZEW survey showed Economic Sentiment improved by more than expected in January.
- EUR/USD turned positive, faces strong static resistance at around 1.1740.
The US Dollar (USD) is under strong selling pressure on Tuesday, driving EUR/USD to the 1.1730 price zone, its highest level in over two weeks. The Greenback fell on the back of escalating risk aversion, triggered by United States (US) President Donald Trump’s decisions.
On the one hand, investors are anxious about the Federal Reserve’s (Fed) leadership. Chair Jerome Powell’s term ends in May, and President Trump has once again said he knows who he wants at the Fed. Even further, US Treasury Secretary Scott Bessent said that the next Fed Chair announcement could be as early as next week, and that the number of candidates is down to four. It is not fresh news, as Trump has said he will “soon” announce Powell’s replacement for months now, but the headlines revived uncertainty about the future of the US monetary policy.
On the other hand, Trump’s obsession with seizing Greenland, a Danish territory rich in rare earth elements, has pushed the EU-US relationship to unthinkable extremes. President Trump reiterated early Tuesday that Denmark is unable to adequately protect Greenland and said that they will be discussing this issue in Davos after claiming “we have to have Greenland.” Treasury Secretary Bessent added he does not believe the US should be worried about the UK or the EU's possible financial retaliatory means.
Also, Trump threatened to impose 200% tariffs on French wines and Champagne following France's intention to decline the invitation to join his “Board of Peace,” meant to supervise the next phase of the Gaza peace plan. Trump also invited Russian President Vladimir Putin to be part of it, something European leaders don’t feel comfortable with.
Other than that, Germany published the January ZEW survey on Economic Sentiment, which improved to 59.6 from 45.8 in December, and to 40.8 from 33.7 in the EU. The assessment of the current situation in Germany printed at -72.7 better than the previous -81. Encouraging readings help keep the Euro afloat.
The US macroeconomic calendar has nothing relevant on Tuesday, so sentiment will keep leading the way.
EUR/USD short-term technical outlook
In the 4-hour chart, EUR/USD holds on to intraday gains and seems poised to extend its advance. The 20-period Simple Moving Average (SMA) has turned higher but remains below the declining 100-period SMA and the gently rising 200-period SMA, all of them below the current level, skewing the risk to the upside. At the same time, the Relative Strength Index (RIS) sits at 74, overbought and partially losing its upward strength, reflecting the ongoing near-term consolidation. Finally, the Momentum indicator offers a similar picture, holding near its recent top. Critical resistance aligns at 1.1808, a relevant high, while SMAs offer support at 1.1699, then at 1.1689.
In the daily chart, EUR/USD has run past all its moving averages, with the 20-day SMA at 1.1699 while above the 100- and 200-day ones. The 100- and 200-day SMAs edge modestly higher, in line with higher highs ahead. Technical indicators have turned firmly higher, but offer a mixed picture as the Momentum indicator remains below its midline, while the RSI sits at 57. Additional gains beyond 1.1740 are needed to confirm another leg north towards the mentioned 1.1808 top.
(The technical analysis of this story was written with the help of an AI tool.)
EUR/USD Current price: 1.1729
- US President Donald Trump keeps threatening tariffs on those opposing his projects.
- The German ZEW survey showed Economic Sentiment improved by more than expected in January.
- EUR/USD turned positive, faces strong static resistance at around 1.1740.
The US Dollar (USD) is under strong selling pressure on Tuesday, driving EUR/USD to the 1.1730 price zone, its highest level in over two weeks. The Greenback fell on the back of escalating risk aversion, triggered by United States (US) President Donald Trump’s decisions.
On the one hand, investors are anxious about the Federal Reserve’s (Fed) leadership. Chair Jerome Powell’s term ends in May, and President Trump has once again said he knows who he wants at the Fed. Even further, US Treasury Secretary Scott Bessent said that the next Fed Chair announcement could be as early as next week, and that the number of candidates is down to four. It is not fresh news, as Trump has said he will “soon” announce Powell’s replacement for months now, but the headlines revived uncertainty about the future of the US monetary policy.
On the other hand, Trump’s obsession with seizing Greenland, a Danish territory rich in rare earth elements, has pushed the EU-US relationship to unthinkable extremes. President Trump reiterated early Tuesday that Denmark is unable to adequately protect Greenland and said that they will be discussing this issue in Davos after claiming “we have to have Greenland.” Treasury Secretary Bessent added he does not believe the US should be worried about the UK or the EU's possible financial retaliatory means.
Also, Trump threatened to impose 200% tariffs on French wines and Champagne following France's intention to decline the invitation to join his “Board of Peace,” meant to supervise the next phase of the Gaza peace plan. Trump also invited Russian President Vladimir Putin to be part of it, something European leaders don’t feel comfortable with.
Other than that, Germany published the January ZEW survey on Economic Sentiment, which improved to 59.6 from 45.8 in December, and to 40.8 from 33.7 in the EU. The assessment of the current situation in Germany printed at -72.7 better than the previous -81. Encouraging readings help keep the Euro afloat.
The US macroeconomic calendar has nothing relevant on Tuesday, so sentiment will keep leading the way.
EUR/USD short-term technical outlook
In the 4-hour chart, EUR/USD holds on to intraday gains and seems poised to extend its advance. The 20-period Simple Moving Average (SMA) has turned higher but remains below the declining 100-period SMA and the gently rising 200-period SMA, all of them below the current level, skewing the risk to the upside. At the same time, the Relative Strength Index (RIS) sits at 74, overbought and partially losing its upward strength, reflecting the ongoing near-term consolidation. Finally, the Momentum indicator offers a similar picture, holding near its recent top. Critical resistance aligns at 1.1808, a relevant high, while SMAs offer support at 1.1699, then at 1.1689.
In the daily chart, EUR/USD has run past all its moving averages, with the 20-day SMA at 1.1699 while above the 100- and 200-day ones. The 100- and 200-day SMAs edge modestly higher, in line with higher highs ahead. Technical indicators have turned firmly higher, but offer a mixed picture as the Momentum indicator remains below its midline, while the RSI sits at 57. Additional gains beyond 1.1740 are needed to confirm another leg north towards the mentioned 1.1808 top.
(The technical analysis of this story was written with the help of an AI tool.)
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