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EUR/USD gains as Trump seems to follow a cautious tariff hike approach.

January 22, 2025

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EUR/USD remains firm above 1.0400 as US President Donald Trump has announced lower-than-anticipated tariffs on China.
ECB’s Lagarde warned that the Euro bloc should be prepared for US tariffs.
ECB’s Stournaras commented that the policy-easing pace could accelerate if the US imposes tariffs on the Eurozone.

EUR/USD clings to gains above the key support of 1.0400 in Wednesday’s European session after a strong recovery move in North American trading hours on Tuesday. The major currency pair remains firm while investors gauge explicit United States (US) tariff plans to build fresh positions.

In two working days, US President Donald Trump has announced 25% tariffs on Mexico and Canada and 10% on China, which will come into effect on February 1. Trump has also threatened to fix trade imbalances with the Eurozone but has not yet provided clear details. On Monday, Trump said he would remedy the trade imbalance either by “raising tariffs or Europe buying more US oil and gas”.

These tariff calls appear less fearful than what market participants had anticipated from Trump’s election campaign comments, diminishing the US Dollar’s (USD) safe-haven demand. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades with caution to near its two-week low of 107.90.