The Euro (EUR) has reversed previous losses and turned positive on the daily chart on Tuesday, trading at 1.1800 at the time of writing, with the four-month highs, at 1.1907, at hand. 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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.07% | -0.20% | -0.28% | -0.04% | -0.15% | -0.03% | -0.22% | |
| EUR | 0.07% | -0.13% | -0.20% | 0.04% | -0.07% | 0.05% | -0.15% | |
| GBP | 0.20% | 0.13% | -0.08% | 0.16% | 0.05% | 0.18% | -0.02% | |
| JPY | 0.28% | 0.20% | 0.08% | 0.25% | 0.14% | 0.25% | 0.07% | |
| CAD | 0.04% | -0.04% | -0.16% | -0.25% | -0.11% | 0.00% | -0.19% | |
| AUD | 0.15% | 0.07% | -0.05% | -0.14% | 0.11% | 0.12% | -0.08% | |
| NZD | 0.03% | -0.05% | -0.18% | -0.25% | -0.00% | -0.12% | -0.19% | |
| CHF | 0.22% | 0.15% | 0.02% | -0.07% | 0.19% | 0.08% | 0.19% |
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.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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