EUR/USD bounces as market pressures abate

• EUR/USD gained 0.8% on Tuesday as trade wars turn hypothetical.
• President Trump's tariff bluffs have been called by the markets after several delays.
• European economic data remains thin this week.

EUR/USD lurched higher by eight-tenths of one percent on Tuesday, regaining lost ground but failing to recapture the 1.0400 handle. Fiber has snapped a six-day losing streak, but overall bullish momentum remains thin with the Euro at the mercy of overall market flows and looming US Nonfarm Payrolls (NFP) figures.

EUR/USD's early-week plunge toward 1.0200 sparked by impending tariffs from US President Donald Trump has firmly recovered ground after the Trump administration took any excuse it could find to avert its self-imposed threats to tax its own citizens for importing goods from other countries. Threats of a flat 10% import tax on European-produced goods are still on the cards, but last-minute pivots into concessions on nearly all of President Trump's targeted countries, except for China, has left investors confident that the posturing is simply that and nothing more. 10% import fees on goods from China are still on the table, but President Trump also failed to follow through on his threat to arbitrarily double tariffs on any countries that retaliate.

To his credit, China's retaliatory tariffs of 10% on US-made goods is a largely theatrical gesture; very few US-made goods make it overseas to Chinese markets, and the move is mostly symbolic. Investors are now tuning out most of President Trump's trade rhetoric as the US administration fumbles its own setup, and future tariff threats are likely to have muted impacts as future concessions get priced in ahead of time.

The US ADP Employment Change data is set to be released on Wednesday; however, this erratic figure is not expected to generate significant movement. Additionally, the US ISM Services Purchasing Managers Index (PMI) report for January is anticipated, with projections indicating a rise from 54.1 to 54.3. The most critical US data point this week will be Friday's Nonfarm Payrolls, which is predicted to decline from 256K to 170K.

EUR/USD price forecast

EUR/USD found enough juice to halt a six-day backslide, but the pair still remains on the wrong side of the 1.0400 handle and the 50-day Exponential Moving Average (EMA) at 1.0440. Bullish momentum has waned out of technical oscillators, and Fiber price action is set for a sideways grind between 1.0500 and 1.0300.

EUR/USD daily chart