Euro (EUR) fell on headlines regarding universal tariffs. FT reported that Treasury secretary Scott Bessent favours universal tariffs on US imports, starting at 2.5% while Trump said he wants tariffs ‘much bigger’ than 2.5%. This puts tariff agenda back on the table and should restraint EUR bulls for now. Pair was last at 1.0428 levels.
Some pullback is not ruled out this week
"Bullish momentum on daily chart intact but shows signs of fading while RSI shows tentative signs of falling from near overbought conditions. Some pullback is not ruled out this week. Support at 1.0420/30 levels (23.6% fibo, 50 DMA), 1.0350 (21 DMA) and 1.03 levels. Resistance at 1.0520, 1.0570 levels (38.2% fibo retracement of Sep high to Jan low)."
"On ECB meeting (Thursday), our house view looks for a cut, consistent with market expectation for a 25bp cut. Recent ECB-speaks remain dovish and continued to point to a measured pace of rate cut with no hint of larger magnitude of rate cut. Stournaras said the cuts should be in the order of 25bp each time so that by end-2025, rates is close to 2%, from the 3% that we are today."
"Klass said that he is comfortable with market bets for rate cuts at the next 2 meetings but not convinced yet that ECB needs to go into stimulative mode. Villeroy said it is plausible for rates to be around 2% in summer. Lagarde said that disinflation process continues, and policymakers do not see themselves as behind the curve. ECB will maintain its measured approach to ease monetary policy."
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European natural gas prices experienced significant weakness yesterday, with TTF closing 3.7% lower, bringing prices back below EUR48/MWh, according to ING's commodity analysts Warren Patterson and Ewa Manthey.
Oil prices came under pressure yesterday with the market and the broader complex unable to escape the sell-off seen in equity markets, ING's FX analyst Francesco Pesole notes.
USD/CAD strengthens as momentum grows among Trump’s advisers to impose 25% tariffs on Canada, potentially starting February 1. The Canadian Dollar (CAD) also struggles as the Bank of Canada (BoC) is expected to implement another 25 basis points rate cut on Wednesday. Meanwhile, the US Dollar gains ground amid uncertainty surrounding the impact of President Trump's policies.
