EUR/USD advances to 1.1485 region, fresh high since February 2022 amid bearish USD

EUR/USD kicks off the new week on a stronger note amid sustained USD selling bias.
Trade-related uncertainties and Fed rate cut bets continue to weigh on the Greenback.
The ECB’s dovish rate cut last week does little to dent the bullish tone around the pair.

Haresh Menghani FXStreet

The EUR/USD pair breaks out through a multi-day-old trading range and touches a fresh high since February 2022, around the 1.1485 area during the Asian session on Monday. The momentum is sponsored by the bearish sentiment surrounding the US Dollar (USD), which supports prospects for an extension of the recent well-established uptrend.

Despite hawkish comments from Federal Reserve (Fed) Chair Jerome Powell, the uncertainty over US President Donald Trump's trade policies continues to undermine the Greenback. Powell said last Wednesday that the Fed is likely to keep its benchmark interest rate steady and wait for greater clarity before considering any adjustments to the policy stance. Meanwhile, Trump's back-and-forth tariff announcements have dented investors' confidence in the US economic growth and dragged the USD to a two-year low at the start of a new week.

The aforementioned factors, to a larger extent, offset the European Central Bank’s (ECB) dovish decision last week and act as a tailwind for the EUR/USD pair. The ECB lowered interest rates for the seventh time in a year on Thursday and warned that economic growth will take a big hit from US tariffs, bolstering the case for more policy easing in the months ahead. This, however, does little to attract any meaningful sellers around the shared currency, validating the near-term positive outlook for the currency pair amid relatively thin liquidity on Easter Monday.

Moving ahead, traders this week will take cues from scheduled speeches by ECB President Christine Lagarde on Tuesday and a slew of influential FOMC members this week. Apart from this, the market focus will be on the release of the flash PMIs, which might provide a fresh insight into the global economic health. This, in turn, might provide some impetus to the USD and the EUR/USD pair. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the currency pair remains to the upside and any corrective pullback is likely to be bought into.

Tariffs FAQs

What are tariffs?

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.

What is the difference between taxes and tariffs?

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.

Are tariffs good or bad?

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.

What is US President Donald Trump’s tariff plan?

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.

BRANDED CONTENT

If you're looking for the best brokers to trade the EUR/USD pair, explore our selected options. Knowing each broker’s strengths will help you find the ideal fit for your trading strategy.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD trims gains, nears 1.1700

The EUR/USD pair eases in the American afternoon and approaches the 1.1700 mark. The pair surged earlier in the day after the ECB left interest rates unchanged and upwardly revised inflation and growth figures. The US CPI rose 2.7% YoY in November, nearing Fed’s goal.

GBP/USD steadies below 1.3400 as traders digest BoE policy update and US inflation data

The GBP/USD pair stalls the previous day's pullback from the vicinity of mid-1.3400s and a nearly two-month high, though it struggles to attract meaningful buyers during the Asian session on Friday. Spot prices currently trade around the 1.3380-1.3385 region, up only 0.05% for the day, amid mixed cues.

Gold edges lower despite Fed rate cut hopes on cooling US inflation

Gold price declines to below $4,350 during the early Asian trading hours on Friday. The precious metal edges lower due to some profit-taking and weak long liquidation from shorter-term futures traders.

Bitcoin, Ethereum, XRP face sharp volatility as US posts lowest inflation rate in years

The latest inflation report released on Thursday in the United States sparked a wave of volatility in the crypto markets. The US Consumer Price Index rose 2.7% YoY in November, below forecasts of 3.1%, and lower than September's 3.0% reading, according to the Bureau of Labour Statistics.

Bank of England cuts rates in heavily divided decision

The Bank of England has cut rates to 3.75%, but the decision was more hawkish than expected, leaving market rates higher and sterling slightly stronger. It's a close call whether the Bank cuts again in February or March.

Ripple holds $1.82 support as low retail demand weighs on the token

Ripple (XRP) is trading between a key support at $1.82 and resistance at $2.00 at the time of writing on Thursday, reflecting the lethargic sentiment in the broader cryptocurrency market.