EUR/USD holds near 1.03 as tariff concerns support USD strength
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The EUR/USD pair remains under pressure around 1.03, as renewed tariff concerns strengthen the U.S. Dollar. Over the weekend, President Donald Trump confirmed new 25% tariffs on steel and aluminum imports, a move expected to hit major US trading partners, including Canada, Mexico, Brazil, and China.
USD Gains on Tariff-Driven Inflation Concerns
Market reaction has been USD-positive, with short-term U.S. inflation expectations edging higher as traders speculate that tariffs could further elevate consumer prices. This has led investors to adjust rate cut expectations globally, anticipating faster easing outside of the U.S. Despite the stronger dollar, EUR/USD has been mostly range-bound, with Danske Bank expecting sideways trading ahead of Tuesday’s U.S. CPI print and Federal Reserve Chair Jerome Powell’s testimony before Congress.
Danske Bank Outlook: EUR/USD to Stay Between 1.04 and 1.05
Danske Bank analysts suggest that the EUR/USD pair will likely trade within the 1.04-1.05 range in the near term, but they maintain a longer-term bearish bias, expecting the euro to test parity (1.00) later this year. They highlight that USD weakness could emerge if the US manufacturing sector improves relative to the services sector, a trend that has historically weighed on the dollar. However, current market conditions favor a stronger USD, given global trade tensions and tariff risks.
Key Market Events to Watch
With traders bracing for potential volatility, focus now shifts to: Tuesday: Fed Chair Jerome Powell’s testimony before Congress; Wednesday: US Consumer Price Index (CPI) data release. Both events will be critical in shaping market sentiment and influencing the near-term trajectory of EUR/USD.
USD Gains on Tariff-Driven Inflation Concerns
Market reaction has been USD-positive, with short-term U.S. inflation expectations edging higher as traders speculate that tariffs could further elevate consumer prices. This has led investors to adjust rate cut expectations globally, anticipating faster easing outside of the U.S. Despite the stronger dollar, EUR/USD has been mostly range-bound, with Danske Bank expecting sideways trading ahead of Tuesday’s U.S. CPI print and Federal Reserve Chair Jerome Powell’s testimony before Congress.
Danske Bank Outlook: EUR/USD to Stay Between 1.04 and 1.05
Danske Bank analysts suggest that the EUR/USD pair will likely trade within the 1.04-1.05 range in the near term, but they maintain a longer-term bearish bias, expecting the euro to test parity (1.00) later this year. They highlight that USD weakness could emerge if the US manufacturing sector improves relative to the services sector, a trend that has historically weighed on the dollar. However, current market conditions favor a stronger USD, given global trade tensions and tariff risks.
Key Market Events to Watch
With traders bracing for potential volatility, focus now shifts to: Tuesday: Fed Chair Jerome Powell’s testimony before Congress; Wednesday: US Consumer Price Index (CPI) data release. Both events will be critical in shaping market sentiment and influencing the near-term trajectory of EUR/USD.