EURUSD:
The EUR/USD pair is strengthening on Tuesday, trading near 1.0410 during the Asian session after losses the previous day. The EUR/USD’s recovery can be attributed to the weakening of the US dollar (USD) following the decline in Treasury yields.
The US Dollar Index (DXY), which tracks the USD against six major currencies, suffered minor losses near 108.00 as US Treasury yields fell about 2% on Monday. The 2-year and 10-year yields stood at 4.24% and 4.53%, respectively.
However, the risk-sensitive EUR/USD is facing challenges as the Federal Reserve (Fed) may take a more cautious stance on potential rate cuts in 2025, signaling a shift in its approach to monetary policy. This adjustment comes amid uncertainty surrounding economic policies expected under the Trump administration.
In addition, safe-haven outflows are weighing on the euro amid heightened geopolitical risks related to the protracted Russia-Ukraine conflict and ongoing tensions in the Middle East. On Monday, Israel’s UN Ambassador Danny Danon issued a stern warning to Iran-backed Houthi militants in Yemen, urging them to stop rocket attacks on Israel, Reuters reported.
Trading recommendation: Watch the level of 1.0400, if consolidated below consider Sell positions, if rebounded consider Buy positions.
Origin: FreshForex
