EUR/USD climbs higher as market sentiment shifts to risk-on ahead of Trump’s inauguration
FUNDAMENTAL OVERVIEW:
- EUR/USD rebounds toward 1.0360 amid a risk-on sentiment, as investors turn their attention to Trump’s inauguration.
- The Federal Reserve is anticipated to maintain interest rates at current levels through the May policy meeting.
- ECB’s Stournaras cautions that increased US tariffs could push Eurozone inflation below the central bank’s target.
EUR/USD surges sharply to approach 1.0360 during Monday’s North American session, buoyed by a decline in the safe-haven appeal of the US Dollar (USD) ahead of the inauguration of US President-elect Donald Trump. The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, slips to around 109.00.
The USD faces selling pressure as markets digest expectations that Trump may soon declare a national emergency after assuming office. According to Bloomberg, such a move could enable increased domestic energy production and the rollback of several climate change policies implemented under Joe Biden’s administration.
A Fox News Digital report further suggests that Trump plans to sign over 200 executive orders on his first day in office, potentially including measures like stricter immigration controls, tax cuts, and higher import tariffs. These anticipated policies could benefit the USD, as investors expect them to stimulate economic growth and heighten inflationary pressures in the United States. Such conditions would support the Federal Reserve’s ability to maintain interest rates at current levels for an extended period.
EUR/USD TECHNICAL ANALYSIS H4 CHART:
Technical Overview:
EUR/USD is trading within a down channel.
EUR/USD is moving above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in Buying Zone, while the Stochastic oscillator suggests Positive trend.
Immediate Resistance level: 1.0397
Immediate support level: 1.0329
HOW TO TRADE EUR/USD
Following an extended downtrend, the EUR/USD pair has halted its decline and formed a temporary support level, prompting a reversal to the upside. EUR/USD has breached a significant resistance zone with a strong bullish candle, signaling considerable strength. After this breakout, the pair may retest the breakout level before potentially resuming its upward trajectory.