EUR/USD: Euro is balancing between the levels 1.0400 – 1.0500 trying to find supports

The single European currency is trading at the threshold of the 1.05 level in the early hours of Tuesday, having recovered relatively quickly from the intense pressure it received during the opening of the Asian zone in the wake of Donald Trump's statements on the adoption of high tariffs on imports from Mexico and Canada.

This development keeps concerns about the return of inflationary pressures in the US economy high on the agenda, which will make it more difficult for the Fed to further reduce key interest rates.

The bets are now mixed on the prospect of further cuts in key rates by Fed, when before Donald Trump's victory the odds of another cut in December were extremely high.

Yesterday, despite the poor agenda, was quite interesting with the European currency maintaining a mild upward trend, expanding the reaction above 1,05 level, but as expected, this effort came to an end quite soon.

One of the catalysts that supported the European currency's reaction was the slight decline in yields on US government debt securities, with the 10-y bond temporarily falling below the 4.30 level, having now moved well away from the recent highs of 4.48.

This development currently confirms my assessment of a decline in the level of yields with the scenario of a return close to 4.00 in near future remaining on the table.

The broader market picture remains the same. Geopolitical risks, which remain extremely high, and concerns about the course of the European economy, which intensified after Friday's data, complement the negative environment, weighing on the European currency.

Apart from some good reactions, it is likely that the European currency will currently find it particularly difficult to develop strong upward momentum and move far away from the recent low levels of 1.03 - 1.05.

The Old Continent has a non-existent agenda for today, while on the other side of the Atlantic, consumer confidence, new home sales and the minutes from the last Fed meeting stand out.

I will maintain the idea of ​​buying the European currency on new dips near to recent lows , as the US currency's gains in recent weeks have been quite significant and signs of fatigue from the recent rally are already on the table.