The Euro (EUR) is making headlines as it climbs to a new long-term peak, defying earlier losses and testing the September 2025 levels around 1.1920, currently facing some tension. This surge comes amid a backdrop of weakened sentiment for the US Dollar (USD), influenced by uncertainty in trade agreements, market anticipation of further easing measures from the Federal Reserve (Fed), and increasing fears of potential government shutdowns in the US.
Recent developments have added to the complexity of the situation. A fresh round of tariffs aimed at South Korea underscores the unpredictable nature of US trade policies. At the same time, political unrest is brewing in the US, particularly in Minnesota, where tensions are rising following lethal immigration raids. This turmoil coincides with the Fed's two-day meeting that is set against unprecedented political pressures as it deliberates over monetary policy.
Given these circumstances, any US Dollar recoveries may be short-lived, while the Euro seems likely to hold steady close to its mid-term peaks around 1.1920. The market sentiment appears optimistic on this Tuesday, which bolsters the Euro's position even further.
Looking ahead at the economic calendar, the Consumer Confidence report from the US could offer key insights later today, alongside anticipated speeches from European Central Bank (ECB) President Christine Lagarde and Bundesbank President Joachim Nagel.
Market Movers - Daily Digest: Trade uncertainties and growing political strife are casting shadows over the US Dollar's performance.
- On Monday, President Donald Trump announced an increase in tariffs on South Korea to 25% from the prior 15%, citing the nation's failure to adhere to last year's trade agreement. Interestingly, Asian markets have largely ignored this news, with the South Korean Kospi Index climbing by 2.75%. Nonetheless, the overarching uncertainty surrounding US trade practices continues to hinder a rebound for the Dollar.
- In Washington, Senate Democrats have vowed to obstruct a government funding bill unless stringent restrictions are placed on the Trump administration’s anti-immigration directives. This standoff raises the specter of a partial government shutdown beginning Saturday, further weakening the already beleaguered US Dollar.
- Additionally, reports indicate that the Fed and the Bank of Japan (BoJ) sought USD/JPY quotes from major banks, stirring speculation of a collaborative intervention aimed at bolstering the Japanese Yen (JPY). This has led investors to reconsider their long positions on the Dollar.
- On the economic front, US Durable Goods Orders experienced a surprising boost of 5.3% in November, significantly surpassing the expected 0.5% rise and reversing a previous 2.1% decline in October. Despite this positive data, the Dollar saw little movement in response.
- Today's attention will focus on the US Consumer Confidence figures, while tomorrow's Fed decision on monetary policy is also in the spotlight. Analysts widely expect the central bank to maintain its benchmark interest rate within the current range of 3.50%-3.75%. Trump may also generate buzz with comments regarding the future of Chairman Jerome Powell.
Technical Analysis - EUR/USD Bulls Testing Resistance Levels: The EUR/USD pair is continuing its bullish trajectory and is currently probing the 1.1920 region, marking significant highs for 2025. Technical indicators are indicating increased momentum, with the Moving Average Convergence Divergence (MACD) histogram widening again. However, the Relative Strength Index (RSI) has reached overbought territory.
Should the Euro confirm a break above the September 2025 high at 1.1918, attention may shift toward the psychological milestone of 1.2000. Conversely, if bearish sentiment prevails, support could be found near Monday's low at around 1.1830, with another support level nearby at Friday's low of approximately 1.1725.
Economic Indicator - Consumer Confidence: The Consumer Confidence index, published monthly by the Conference Board, surveys American consumers to assess their outlook on business conditions and potential future developments. This report encompasses consumer attitudes, spending intentions, plans for vacations, and expectations regarding inflation, employment, stock prices, and interest rates. Ultimately, these insights reflect whether consumers are inclined to make purchases, which is crucial since consumer spending plays a pivotal role in the US economy. Typically, a robust reading is seen as favorable for the US Dollar, while a weaker reading tends to diminish its value. Note: Access to specific figures for this indicator is restricted due to the Conference Board's policies.
Next Release: Scheduled for Tue, Jan 27, 2026, at 15:00.
Frequency: Monthly.
Consensus: Not available.
Previous: Not available.
Source: Conference Board.
Economic Indicator - ECB President Lagarde's Speech: Christine Lagarde, President of the European Central Bank and former Managing Director of the International Monetary Fund, has held her position since November 2019. As part of her responsibilities, she conducts press conferences to discuss the ECB's views on the current and future state of the Eurozone economy. Her statements can have immediate effects on the Euro's value, with hawkish comments typically leading to a stronger Euro, whereas dovish remarks may put downward pressure on it.
Next Release: Expected on Tue, Jan 27, 2026, at 17:00.
Frequency: Irregular.
Consensus: Not available.
Previous: Not available.
Source: European Central Bank.
