EUR/USD steadies within range amid an improved market sentiment
- EUR/USD consolidates below 1.1700 after bouncing from 1.1670.
- Trump's Davos speech, with a softer tone towards Europe, has eased the "Sell America" trade.
- US PCE Prices Index and the GDP data release might drive the US Dollar on Thursday.
EUR/USD is trading a few pips below the 1.1700 level at the time of writing on Thursday, practically flat on the daily chart, after the reversal from Tuesday's highs at 1.1770 was halted 100 pips lower, at the 1.1670 area on Wednesday. US President Donald Trump toned down his threats against its European partners at the World Economic Forum in Davos, triggering a relief rally and allowing the US Dollar to regain some of the ground lost earlier this week.
Trump stepped back on his threat to impose tariffs on European countries opposing his plans to annex Greenland and ruled out military action to take the island. Later on, he announced the framework of a deal with NATO on his social media account. The US president did not provide any details of the agreement, but the announcement helped ease tensions with Europe.
As some calm returns to the markets, investors will shift their focus back to the macroeconomic data domain, where the US Personal Consumption Expenditures (PCE) Price Index and the Q3 Gross Domestic Product (GDP) figures might provide further insight into the path of the US Federal Reserve's (Fed) monetary policy.
In Europe, the European Central Bank's (ECB) Monetary Policy Meeting Accounts and the German Bundesbank Monthly Report might provide some guidance to the Euro on Thursday.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | -0.01% | 0.27% | -0.07% | -0.66% | -0.24% | -0.07% | |
| EUR | 0.01% | -0.00% | 0.28% | -0.05% | -0.64% | -0.23% | -0.05% | |
| GBP | 0.01% | 0.00% | 0.28% | -0.06% | -0.65% | -0.23% | -0.06% | |
| JPY | -0.27% | -0.28% | -0.28% | -0.33% | -0.90% | -0.51% | -0.32% | |
| CAD | 0.07% | 0.05% | 0.06% | 0.33% | -0.58% | -0.17% | -0.00% | |
| AUD | 0.66% | 0.64% | 0.65% | 0.90% | 0.58% | 0.43% | 0.58% | |
| NZD | 0.24% | 0.23% | 0.23% | 0.51% | 0.17% | -0.43% | 0.17% | |
| CHF | 0.07% | 0.05% | 0.06% | 0.32% | 0.00% | -0.58% | -0.17% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily Digest Market Movers: US Dollar bounces up as Trump eases tensions with Europe
- Trump has taken off the table the option of a military confrontation between NATO members and the threat of additional tariffs on EU countries, and the market has sighed with relief. The US Dollar has regained some ground lost in previous days, and the Euro has pulled back.
- The transatlantic relationship is still far from its best moment, though. ECB President Christine Lagarde walked out abruptly of an invitation-only dinner – hosted by BlackRock CEO Larry Fink at Davos – after US Commerce Secretary Howard Lutnick criticized the European Union during a speech.
- The focus on Thursday is on the release of the delayed US Personal Consumption Expenditures Price Indexes for October and November. PCE inflation is expected to have remained at growing levels significantly above the Fed's 2% target in November.
- At the same time, the US Bureau of Economic Analysis will release the final reading of the Q3 GDP, which is expected to confirm that economic growth accelerated to 4.3% annualized, from 3.8% in the previous quarter. All in all, data reflecting healthy growth and sticky inflation levels, adding to the case of a Fed monetary pause.
Technical Analysis: EUR/USD is looking for direction halfway through the monthly range
The EUR/USD recovery was capped at 1.1770, and the pair is now looking for direction, halfway through the recent range. The Moving Average Convergence Divergence (MACD) has turned marginally negative on the 4-hour chart, and the MACD line is attempting to cross below the signal line, a bearish sign. The Relative Strength Index (RSI) holds right above 50, showing a neutral level.
Bears have been contained at Wednesday's low of 1.1670, but the pair is struggling to bounce up. A break of that level would increase bearish pressure towards the intraday support in the area of 1.1630. To the upside, previous support at 1.1710 (intraday level) might offer some resistance ahead of the January 2 and 20 highs, in the area of 1.1770
(The technical analysis of this story was written with the help of an AI tool.)
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
