The Euro (EUR) continued to rally against the US Dollar (USD). That occurred despite the fact that Germany’s IFO Business Climate index showed a smaller than forecast rise in March. In the midst of the European session, the EUR/USD was exchanging hands around 1.0830. As Tuesday’s European session developed, it put in a firm bid tone through 1.2950. Specific tariff-related news released over the weekend caused the reversal for the USD. Consequently, the EUR/USD pair exploded.
Traders are especially looking for the EUR/USD to provide further impetus, as it’s still being buffeted by a thousands storms factor. Other notable macroeconomic data from the US and Fed commentary US consumer confidence out today to impact markets. Further, US President Donald Trump’s comments have added to the currency pair’s volatility.
Market participants are speculating on the possibility of the Federal Reserve resuming its rate-cutting cycle soon, which could further impact the EUR/USD dynamics. The currency pair is very sensitive to any fluctuations in gold and Bitcoin prices. It serves to react against the performance of other currency pairs such as GBP/USD. As always, the broader performance of the USD will be a key driver in shaping the EUR/USD trajectory.
Geopolitical developments can affect the EUR/USD exchange rate even more dramatically. For example, a favorable peace settlement between Russia and Ukraine would have significant ramifications. Traders and economists are still trying to make heads or tails of last week’s unexpected comments from Federal Reserve Governor Adriana Kugler. To do so, they hope to understand where monetary policy might go in the future.