Euro Rebounds, Focus Shifts to Central Bank Agenda
The euro strengthened slightly against the US dollar in European trading on Tuesday (February 3rd), with EUR/USD hovering around 1.1815 after touching 1.1776 the previous day. This movement occurred as the dollar began to lose momentum after strengthening at the start of the week, although global sentiment remained significantly influenced by the release of US economic data and geopolitical headlines.
The dollar had previously received a boost from surprisingly positive US manufacturing data—the ISM Manufacturing PMI rose to 52.6 (returning to expansion). This data led market participants to temper expectations of a rapid interest rate cut, allowing the USD to remain "supported," albeit less aggressively than yesterday.
On the policy and diplomacy front, sentiment was also influenced by news of the US-India trade deal. Donald Trump announced a tariff cut for India to 18%, along with India's commitment to reduce purchases of Russian oil and increase purchases of US goods—factors that contributed to market mood (risk appetite) and spilled over into FX movements.
Meanwhile, geopolitical tensions eased slightly after Masoud Pezeshkian expressed readiness to open nuclear negotiations with the US, reducing excessive demand for safe havens and allowing the market to focus more on data and central bank agendas. Today's agenda focuses on the release of the Euro Area Bank Lending Survey from the European Central Bank and comments from Michelle Bowman, which could potentially influence the dollar's direction.
Source: Newsmaker.id
