EUR/USD currency pair attracted buyers around the 1.1370 level during the early European session on Monday, signaling a potential shift in market dynamics. Forex traders have established a new immediate upside hurdle for the pair around the round-figure level of 1.1450. That means more upward momentum could be coming soon.
At the same time, GBP/USD held onto those intraday gains, sitting around the 1.3500 level. The duo’s performance highlighted how well it responded to the declining U.S. dollar. Market participants looked for promising signs of continued strength past this threshold. What analysts found Traders appear to be looking to profit from the intraday strength of the British pound. They say recent campaigns and movements herald this expansion of interest.
A myriad of factors led to the collapse of the U.S. dollar. New bets on future Federal Reserve rate hikes pushed the market participants to sell dollars. Worries over U.S. fiscal policy fed into this flight, with a reaction from investors to developments related to planned tariffs.
On Friday, U.S. President Donald Trump laid out plans to double import tariffs on steel and aluminum. This decision unleashed a wave of anxiety among traders regarding possible economic consequences. In hindsight, this announcement probably helped fuel new fears about rising inflation and trade warfare, selling even more dollars to dollar-hating sellers.
As market analysts point out, fiscal fears and anticipated shifts in monetary policy are moving the markets. This has provided a very positive climate to purchase European currencies. Traders are tentatively watching the most recent smoke clouds to pour from the tariff announcement. They’re figuring out what these things are going to do to the value of their currency in the short term.
The changing picture in the foreign exchange market highlights the short-term responses to the U.S. fiscal policy. Yet, they shed light on alarming trends that dramatically impact global trade. Market participants are eyeing the EUR/USD and GBP/USD currency pairs. They are playing catch-up and making major course corrections to their strategies as a result of these changes.