EUR/USD remains firm as the Dollar bleeds on "Sell America" trade
- EUR/USD remains close to 1.1743 highs after rallying above 1% in two days.
- The German and Eurozone ZEW Economic Sentiment Surveys have improved beyond expectations.
- Trump's latest tariff threat has triggered a "Sell America" trade.
EUR/USD remains close to session highs above 1.1740 at the time of writing, after rallying beyond 1% over the last two days. An upbeat ZEW Economic Sentiment Survey and the US Dollar (USD) reversal followed. US President Donald Trump's threat of additional tariffs on European countries has triggered a "sell America" trade that keeps the Euro buoyed.
Markets remain risk-averse as Trump celebrates the first year of his second term, confirming his will to impose 10% additional tariffs on European countries opposing his plans to annex Greenland. The Eurozone leaders, in the meantime, are meeting in Brussels to discuss how to retaliate against Trump's threat amid an unprecedented trade war between Western allies.
In the Eurozone, the German ZEW Survey, released earlier on the day, revealed that the investors' sentiment about the German economy improved to 59.6 in January, its best reading in more than four years, from 45,8 in December, and bearing expectations of a 50 reading. The sentiment about the current economic situation has improved to -72.7 from -81 in the previous month, well above the consensus -75.5 .
Likewise, the sentiment about the Eurozone's economy has improved to 40.8 from 33.7 in December, lso beating expectations of a 35.2 reading.
The US markets will be reopening after a long weekend on the Martin Luther King Jr. holiday. Still, the US economic calendar is practically empty, with the only release being the ADP weekly report on private-sector employment, and all eyes will be set on President Trump's speech at the Davos forum on Wednesday.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.72% | -0.11% | -0.19% | -0.29% | -0.24% | -0.67% | -0.89% | |
| EUR | 0.72% | 0.62% | 0.54% | 0.43% | 0.49% | 0.05% | -0.17% | |
| GBP | 0.11% | -0.62% | -0.08% | -0.18% | -0.12% | -0.55% | -0.78% | |
| JPY | 0.19% | -0.54% | 0.08% | -0.10% | -0.05% | -0.49% | -0.70% | |
| CAD | 0.29% | -0.43% | 0.18% | 0.10% | 0.06% | -0.38% | -0.59% | |
| AUD | 0.24% | -0.49% | 0.12% | 0.05% | -0.06% | -0.43% | -0.64% | |
| NZD | 0.67% | -0.05% | 0.55% | 0.49% | 0.38% | 0.43% | -0.22% | |
| CHF | 0.89% | 0.17% | 0.78% | 0.70% | 0.59% | 0.64% | 0.22% |
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: Tariff threats hit the Dollar and boost the Euro, for now
- Trump's threat of additional tariffs on European countries has triggered a new round of the "Sell America" trade. Investors are selling the US Dollar and US Treasury yields in a de-dollarisation process as confidence in the US authorities fades. This has sent the Euro (EUR) up by nearly 1% against the US Dollar in two days.
- Denmark's Minister of Economy Stephanie Lose affirmed on Monday that they will keep trying to engage in dialogue with the US, but that if it keeps escalating tensions, it will be a European response at some point.
- Data released by Destatis on Tuesday revealed that the German Producer Prices Index contracted 0.2% in December, beyond the -0.1% expected, following a flat reading in November. Year-on-year, producer prices fell at a 2.5% pace, from -2.3% in November and also beyond the -2.4% reading anticipated by the market consensus. The Euro has continued to appreciate after the data.
- Later on Tuesday, the German ZEW Survey is expected to show that institutional investors' sentiment about the economy continued to improve, reaching 50 in January, which would mark its best reading since July last year, from 45.8 in December and 38.5 in November.
- On Monday, the final Eurozone Harmonised Index of Consumer Prices (HICP) was revised down to 1.9% year-on-year growth in December, from previous estimates of a 2% reading. The core HICP, however, confirmed a 2.3% year-on-year growth. Monthly inflation was left unrevised at 0.2% and 0.3%, respectively.
Technical Analysis: EUR/USD bulls aim for the 1.1740 area
EUR/USD is trading near 1.1720 after hitting session highs at 1.1730¡. The 4-hour Relative Strength Index (RSI) has reached overbought levels, hinting at an overstretched rally, but the Moving Average Convergence Divergence (MACD) keeps trending higher above zero, with its histogram expanding.
The pair might find resistance at the January 6 high in the 1.1740 area, ahead of the January 2 high, at 1.1765. Further up, the December 16 and 24 highs, right above 1.1800, would come into focus. A bearish reversal might find support at the reverse trendline, now at the 1.1660 area ahead of the 1.1635 intra-day level.
(The technical analysis of this story was written with the help of an AI tool.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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.
