EUR/USD steadies near highs amid broad Dollar weakness
- EUR/USD holds gains near four-month highs at 1.1907.
- Trump's tariffs on South Korea and the US government shutdown concerns are likely to keep US Dollar rallies limited.
- Bears should break below 1.1830 to confirm a downside reversal.
The Euro (EUR) remains practically flat on the daily chart on Tuesday, trading at 1.1880 at the time of writing, with downside attempts limited above 1.1850. US trade uncertainty, market expectations of further Federal Reserve (Fed) easing, and the growing chances of a US government shutdown are keeping the Greenback in the doldrums.
A new tariff salvo, this time to South Korea, highlights the erratic US trade policies, while in the US, the risk of a Government shutdown rises as tensions simmer in Minnesota after two people were killed in immigration raids. All this happens on the day the Fed starts its two-day meeting to decide its monetary policy amid unprecedented political pressures.
Against this backdrop, the US Dollar rallies are likely to be short-lived, with the Euro likely to remain relatively steady, not far from mid-term highs in the area of 1.1920. Market sentiment is positive on Tuesday, which is another positive factor for the Euro.
In the economic calendar, the US Consumer Confidence might provide some fundamental guidance later on the day, ahead of the speeches of European Central Bank (ECB) President Christine Lagarde and Bundesbank President Joachim Nagel.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.04% | -0.09% | -0.08% | -0.00% | -0.12% | 0.10% | 0.00% | |
| EUR | -0.04% | -0.14% | -0.09% | -0.04% | -0.17% | 0.06% | -0.04% | |
| GBP | 0.09% | 0.14% | 0.02% | 0.09% | -0.03% | 0.20% | 0.09% | |
| JPY | 0.08% | 0.09% | -0.02% | 0.05% | -0.07% | 0.15% | 0.05% | |
| CAD | 0.00% | 0.04% | -0.09% | -0.05% | -0.12% | 0.10% | 0.02% | |
| AUD | 0.12% | 0.17% | 0.03% | 0.07% | 0.12% | 0.23% | 0.12% | |
| NZD | -0.10% | -0.06% | -0.20% | -0.15% | -0.10% | -0.23% | -0.11% | |
| CHF | -0.00% | 0.04% | -0.09% | -0.05% | -0.02% | -0.12% | 0.11% |
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: Trade uncertainty and political tensions are weighing on the US Dollar
- US President Donald Trump announced on Monday that he will increase tariffs on South Korea to 25%, from the current 15%, for failing to commit to the terms of the trade agreement reached last year. Asian markets have brushed off this news. The South Korean Kospi Index has risen 2.75%, but the uncertainty about US international trade is acting as a headwind for US Dollar recovery.
- In the US, Senate Democrats have threatened to block a government funding bill unless severe restrictions are imposed on the Trump administration's anti-immigration operations. This would cause a partial government shutdown from Saturday, adding pressure on an already weak US Dollar.
- Apart from that, news that the Fed and the Bank of Japan (BoJ) requested USD/JPY quotes from major banks on Friday has boosted speculation of a coordinated intervention to support the Japanese Yen (JPY), which prompted investors to scale back their USD long positions.
- In the economic calendar on Monday, US Durable Goods Orders surged by 5.3% in November, well above the 0.5% increase expected and following a 2.1% contraction in October. The US Dollar, however, was little moved following the data release.
- On Tuesday, the focus will be on the US Consumer Confidence, although investors will keep an eye on Wednesday's Fed monetary policy decision. The bank is widely expected to leave its benchmark interest rate unchanged in the current 3.50%-3.75% range. Trump might be tempted to steal the show, with comments about Chairman Jerome Powell's successor.
Technical Analysis: EUR/USD has support at the 1.1830 area
EUR/USD holds gains within Monday's trading range. Technical indicators show a softer bullish momentum on the 4-hour chart. The Moving Average Convergence Divergence (MACD) histogram remains positive but has contracted from recent highs, and the Relative Strength Index (RSI) remains above 60, levels consistent with a bullish trend, after pulling back from overbought territory.
The pair has dropped to the mid-range of the 1.1800s, but remains above Monday's low around 1.1830, which is the prime support, ahead of Friday's low near 1.1725.
To the upside, the area between Monday's high, at 1.1907, and the September peak of 1.1918 is likely to offer significant resistance. Further up, the 1.2000 psychological level emerges as a potential target.
(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.
