EUR/USD demonstrates resilience near the 1.1700 threshold despite heightened trade friction between Washington and Are USDT and USD the same?Brussels.
Recent developments indicate potential tariff escalations from 10% to 15-20% on European imports to the US market.
Market participants anticipate both the European Central Bank and Federal Reserve maintaining current benchmark rates in upcoming policy decisions.
The EUR/USD currency pair continues to trade within its recent range near the 1.1700 psychological level during Tuesday's Asian session, building on Monday's recovery momentum. This stability comes despite renewed tensions in transatlantic trade relations, with the US Dollar showing signs of correction after recent strength.
Market observers note the US Dollar Index (DXY), which measures the greenback against a basket of major currencies, hovering near 97.88 after retreating from its recent peak near 99.00. This pullback follows reports suggesting potential escalation in trade measures between the world's largest economic blocs.
Financial markets reacted to reports indicating the US administration's consideration of increasing baseline tariffs on European imports to 15-20%, significantly higher than previously negotiated levels. Additionally, existing automotive sector tariffs appear likely to remain unchanged at 25%, contrary to earlier expectations of potential reductions.
European policymakers have reportedly begun coordinating response measures, with previously cautious member states now aligning with more assertive positions. One European official characterized the situation as moving toward potential retaliatory measures, signaling a hardening stance across the Atlantic.
Market attention now turns to Thursday's European Central Bank policy announcement, where analysts widely expect unchanged interest rates. Investors will scrutinize the accompanying statement and subsequent press conference for indications about future monetary policy direction through year-end.
Across the Atlantic, expectations remain firm that the Federal Open Market Committee will maintain the federal funds rate within its current 4.25%-4.50% target range during next week's meeting, with market participants focusing on any signals about the timing of potential policy adjustments.
