Gap Up Fails: EUR/USD Reversal to 1.1850
EUR/USD weakened after opening with a gap up on Monday. In the Asian session, the pair fell and traded around 1.1860, with pressure pushing it closer to the 1.1850 area.
The euro's weakness occurred as the US dollar strengthened due to increased demand for safe-haven assets. Risk-off sentiment intensified after US President Donald Trump warned he would impose 100% tariffs on Canadian goods if Ottawa reached a trade deal with China.
Responding to this, Canadian Prime Minister Mark Carney said on Sunday that Canada did not plan to pursue a free trade agreement with China. He emphasized that his understanding with Beijing was only to reduce tariffs in some previously affected sectors.
Despite the dollar's strengthening, the market also sensed an issue that could restrain the greenback's gains: rumors of potential intervention in the forex market to support the Japanese yen (JPY). Traders cited the Federal Reserve Bank of New York conducting "rate checks" on major banks—a move often interpreted as a signal of preparations to facilitate intervention.
From Europe, flash Eurozone PMI data signaled a slowing service sector. The services index fell to 51.9, lower than December's figure and also below market expectations, adding to the burden on the euro.
Market participants are now awaiting the release of Germany's IFO Business Sentiment Index, scheduled for release today. This data has the potential to determine the future direction of EUR/USD—whether pressure continues to reach 1.1850 or whether the euro can stabilize again above 1.1860. (asd)
Source: Newsmaker.id
