EUR/USD rebounds as US Dollar retreats.

EUR/USD finds support below 1.0800 as the US Dollar struggles to extend upside despite easing fears of impending tariffs by the US on April 2.
Preliminary US S&P Global Services PMI gained significantly in March.
The ECB is expected to cut interest rates again in April.

EUR/USD finds cushion around 1.0780 and rises to near 1.0820 during European trading hours on Tuesday. The major currency pair attracts bids even though the Euro (EUR) trades cautiously on expectations that the European Central Bank (ECB) could reduce interest rates again in April. The ECB has cut its key borrowing rates six times since June and expects to win the battle against inflation this year.

Last week, ECB President Christine Lagarde said while testifying before the European Parliament Committee that the inflationary impact of the Trump-led trade war is temporary as the effect would “ease in the medium term” due to “lower economic activity dampening inflationary pressures”.

Lately, traders have pared ECB dovish bets on expectations that the tariff war between the US and the Eurozone could lead to an increase in inflationary pressures in the old continent for a longer period.

On the economic front, German IFO Business Climate data for March, an early indicator of current conditions and business expectations, has come in higher at 86.7 from the prior reading of 85.3 but missed estimates of 86.8. The Expectations component – which presents outlook for the next six months – increased to 87.7 from the prior release of 85.6. It also missed the expectations of 87.9. IFO Current Assessment data came in at 85.7, beating estimates of 85.5 and the former reading of 85.0.