Euro Gains on Trump’s Dollar‑Tolerant Stance as Fed Cuts Loom

Euro Gains Momentum as Dollar Weakens Following Trump Comments

New York,NY – January 29,2026 – The Euro has experienced a sustained rally against the US Dollar,reaching 1.2000 on Wednesday and briefly peaking at 1.2082 the previous evening. this four-day upward trend is largely attributed to statements made by United States President Donald Trump regarding the Dollar’s value, alongside increasing political uncertainty within Washington. The exchange rate between these two major currencies is drawing increased scrutiny from investors worldwide.

Trump’s Stance and Market Reaction

President Trump recently indicated he does not view the Dollar’s depreciation as a cause for concern, characterizing it as a moderate decline.Financial markets interpreted this as a potential signal that the management may be willing to accept a weaker Dollar to boost the competitiveness of American exports. This shift in perceived policy has exerted downward pressure on the Dollar’s value.

Geopolitical Factors and Currency Speculation

adding to the Dollar’s woes are ongoing political uncertainties stemming from Washington, including renewed discussions about Greenland and continued criticism of the Federal Reserve’s independence. Simultaneously, speculation is mounting regarding a possible coordinated currency intervention between the United States and Japan to bolster the Japanese Yen. Such intervention would likely increase demand for the Yen, further diminishing the Dollar’s strength.

Federal Reserve Meeting Looms

Investors are now keenly focused on the upcoming Federal Reserve meeting. While a maintenance of current interest rates is widely anticipated, market participants are eager for any indications regarding the timing of future rate reductions. Current projections suggest the possibility of two 25-basis-point cuts before the end of the year, according to Reuters.

Technical Analysis: EUR/USD

Technical analysis reveals a bullish pattern for the EUR/USD pair. On the four-hour chart, the currency pair has demonstrated an upward movement toward 1.2080. A breach of this resistance level could signify continued bullish momentum. Currently, the pair is undergoing a corrective phase, with support established around 1.1935. The Moving Average Convergence Divergence (MACD) indicator confirms this correction, displaying a histogram and signal line positioned above zero with a downward trajectory.

Further analysis of the hourly chart reveals that,after encountering resistance,EUR/USD is exhibiting a corrective pattern. A rebound from the 1.1935 support level would provide further evidence of a continuing bullish trend. The Stochastic indicator’s lines are approaching the 20 level, suggesting the correction may persist before an upward trend resumes, perhaps targeting 1.2100.

Key EUR/USD Levels – A snapshot

Timeframe	Current Trend	Key Resistance	Key Support
H4 (4-Hour)	Bullish with Correction	1.2080	1.1935
H1 (1-Hour)	Corrective	1.2080	1.1935

Looking Ahead

The EUR/USD pair continues to exhibit robust bullish momentum, propelled by a weaker US Dollar and heightened geopolitical tensions. The ongoing corrective phase may present strategic buying opportunities, with potential for further growth towards 1.2100 and 1.2200, contingent upon the Federal Reserve’s forthcoming decisions and broader global market dynamics. What impact will the Federal Reserve’s signaling have on currency markets? And how will escalating geopolitical risks affect investor confidence in the Dollar?

Disclaimer: This analysis is provided for informational purposes only and should not be construed as financial advice. Market conditions are subject to change, and trading involves risks. Consult with a qualified financial advisor before making any investment decisions.

Share your thoughts on the future of the EUR/USD pair in the comments below!

How is Trump’s dollar‑tolerant stance affecting the Euro?

Euro Gains on Trump’s Dollar‑Tolerant Stance as Fed Cuts Loom

The Euro has been steadily appreciating against the US Dollar in recent weeks, a movement fueled by a surprising shift in market perception regarding Donald Trump’s economic policies and growing anticipation of interest rate cuts by the federal Reserve. This confluence of factors is creating a complex landscape for currency traders and impacting global financial markets.

Trump’s Evolving Dollar Policy: A Shift in Narrative

Throughout his first term, Donald Trump frequently criticized a strong dollar, arguing it harmed US manufacturing competitiveness. He even intervened verbally, and occasionally through policy, to weaken the currency. However, during his recent campaign and post-election rhetoric, this stance has noticeably softened.

This change is attributed to several factors:

* Focus on Economic Growth: The current emphasis appears to be on fostering robust economic growth, even if it means accepting a stronger dollar. A strong dollar can attract foreign investment, which is seen as crucial for funding infrastructure projects and stimulating the economy.

* Reduced Trade War Rhetoric: A less confrontational approach to international trade, compared to his first term, reduces the need for aggressive currency devaluation to offset tariffs.

* Fiscal Policy Concerns: With increasing national debt, the management might potentially be less inclined to actively pursue policies that could further destabilize the dollar.

This perceived “dollar tolerance” has removed a significant downside risk for the currency, prompting investors to reassess their positions. The market now anticipates less intervention,leading to increased demand for the dollar – initially. However, the expectation of Fed cuts is proving a stronger force.

The Federal Reserve and Interest Rate Expectations

The Federal Reserve has signaled a potential shift in monetary policy, hinting at multiple interest rate cuts throughout 2026. This pivot is driven by slowing inflation and growing concerns about a potential economic slowdown.

Here’s how this impacts the Euro-Dollar exchange rate:

1. Reduced Yield Advantage: Lower US interest rates diminish the attractiveness of dollar-denominated assets. investors seek higher returns elsewhere, driving capital towards currencies like the Euro.
2. Increased Risk Appetite: Rate cuts frequently enough signal a willingness by the central bank to support economic growth, boosting investor confidence and encouraging investment in riskier assets – often benefiting the Eurozone.
3. Dollar Weakness: As the demand for dollars decreases due to lower yields, its value naturally declines against other currencies.

Recent economic data releases, including softer-than-expected US jobs reports and a continued decline in the Consumer Price index (CPI), have reinforced expectations of aggressive Fed easing. futures markets are currently pricing in at least three 25-basis-point rate cuts before the end of the year.

Eurozone Resilience and the ECB’s Position

While the US faces economic headwinds, the Eurozone has demonstrated surprising resilience. Despite the ongoing conflict in Ukraine and high energy prices, the eurozone economy has avoided a deep recession.

The European Central Bank (ECB) has maintained a more cautious approach to rate cuts than the Fed. While acknowledging the slowing economic growth, the ECB remains focused on controlling inflation, which remains above its 2% target. This divergence in monetary policy further supports the Euro’s strength.

* ECB Hawkishness: The ECB’s reluctance to cut rates as aggressively as the Fed creates a yield differential in favor of the Euro, attracting capital inflows.

* Eurozone Economic Data: Recent improvements in Eurozone manufacturing activity and consumer confidence suggest the economy is stabilizing.

* Fiscal Coordination: Increased fiscal coordination among Eurozone member states is providing a boost to economic growth.

Historical Parallels: The 2015-2017 Period

The current situation bears some resemblance to the period between 2015 and 2017, when the Euro also strengthened against the dollar. During that time, the ECB maintained a dovish stance while the Fed began to raise interest rates.The resulting yield differential fueled a significant thankfulness of the Euro.

Though, there are key differences:

* Geopolitical Risks: The current geopolitical landscape is more complex and uncertain than it was in 2015-2017, with the ongoing war in Ukraine adding a layer of risk.

* Global Debt Levels: Global debt levels are significantly higher now, making the global economy more vulnerable to shocks.

* Political Uncertainty: Political uncertainty in both the US and Europe remains elevated.

Implications for Investors and Businesses

the strengthening Euro has significant implications for investors and businesses:

* US Exporters: US exporters will find their products more expensive in Eurozone markets, possibly reducing sales.

* Eurozone Exporters: Eurozone exporters will benefit from increased competitiveness.

* International Investors: Investors with exposure to Eurozone assets will see their returns increase in dollar terms.

* Currency Hedging: Businesses engaged in cross-border trade should consider hedging their currency exposure to mitigate risk.

Real-World Example: The Automotive Industry

The automotive industry provides a clear example of the impact of the Euro’s appreciation. German automakers, as a notable example, benefit from a stronger Euro as it increases the purchasing power of their customers in the US. Conversely, US automakers may struggle to compete in the Eurozone market. In late 2025,BMW reported a significant increase in US sales,partially attributed to the favorable