EUR/USD surges as Trump's presidential memo lacks immediate tariff imposition.
EUR/USD rallies to near 1.0400. in Monday’s North American session. The major currency pair soars as the safe-haven appeal of the US Dollar (USD) diminishes significantly after a report from the Wall Street Journal (WSJ) indicated that the presidential memo by United States (US) President-elect Donald Trump lacks imposition of tariffs immediately. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, plunges to near 108.25.
The WSJ reported that Trump's presidential memo directs agencies to scrutinize the US's relationship with China and its neighboring nations and lacks tariffs' imposition right from the first day of office, which market participants feared earlier.
The Greenback was already under pressure after investors digested reports from Bloomberg that Trump would declare a national emergency soon after taking office. Market participants expected that this move would allow him to boost domestic energy production and reverse some climate change policies executed under Joe Biden’s administration.
Also, a report from Fox News Digital shows that Trump would sign over 200 orders on his first day of office, which might include policies such as immigration controls, tax cuts, and higher import tariffs. The impact of these policies will be favorable for the US Dollar as investors expect them to boost growth and inflationary pressures in the United States (US). The scenario will allow the Federal Reserve (Fed) to keep interest rates at their current levels for longer.
According to the CME FedWatch tool, traders expect the Fed to keep borrowing rates in the current range of 4.25%-4.50% in the next three policy meetings. On the contrary, analysts at Morgan Stanley expect that the Fed can cut interest rates in March as the underlying inflation decelerated in December. Last week, the Consumer Price Index (CPI) report for December showed that core inflation – which excludes volatile food and energy prices – rose at a slower pace of 3.2% year-over-year.(Cay)
Source: Fxstreet
