The EUR/USD exchange rate turned lower on Tuesday, after surging on Monday. The two currency crossed below the 1.1500 threshold. It was hit hard as the US Dollar continued to strengthen, bolstered by the persistent uncertainty in the US financial markets. Traders remain on edge following all of the recent volatility that former President Donald Trump caused with his incendiary comments directed at Federal Reserve Chair Jerome Powell. These comments have stoked fears about the Fed’s independence and the potential politicization of monetary policy.
At the start of the European market on Tuesday, the bullish momentum for EUR/USD was fading, as the pair fell under the notable level of 1.1500. The resurgent US Dollar has put a lid on the pair’s bullish potential. Despite the recent rally, the outlook for the Euro against the Dollar remains mixed, with investors closely monitoring economic data from the United States.
On Tuesday, the GBP/USD currency pair traded in wide swings, drawing investor attention. It oscillated in a narrow range, staying under the 1.3400 figure. The downside seems increasingly limited for this pair, indicating possible bottoming. Fears about an impending economic slowdown in the U.S. are still working to put a damper on the Greenback.
Market analysts are beginning to argue that despite the modest recovery, the long-term downtrend in the US Dollar persists. Fears about financial markets’ stability and Trump’s public attacks on Powell are factors that add to the investor’s anxiety. We expect the narrative of Federal Reserve independence to continue driving market sentiment over the coming days.
Recent changes to the economic landscape have created extra headwinds for both currencies. This is why the EUR/USD is unique among the most popular pairs, because traders seem to adore the pair. Secondly, it responds nimbly to new American macroeconomic indicators. As investors continue to digest this new influx of information, return volatility continues to have the potential to be rather high.