EUR/USD climbs as sentiment pushes Greenback lower

• EUR/USD gained 0.7% on Thursday, bolstered by investor confidence.
• New tariff threats turn out to be more of the same: unclear and hypothetical.
• European data surprises nobody, US PPI inflation pressure eases slightly.

EUR/USD caught a bid on Thursday, climbing seven-tenths of one percent and vaulting back over the 1.0400 handle. A general weakening in the Greenback bolstered Fiber flows off the back of not-as-bad-as-expected US Producer Price Index (PPI) inflation figures. Continued wavering by the Trump administration on ongoing tariff threats has investors assuming a trade war isn't going to happen.

Forex Today: Markets now look at tariffs and US fundamentals

European economic data came in exactly as expected on Thursday, giving traders nothing meaningful to chew on. Still, although broadly above forecasts, US PPI figures helped ease investor concerns about a resurgence in inflation pressures. Core PPI inflation for the year ended in January came in at 3.6% YoY, well above the forecast 3.3% but a tick below the revised figure of 3.7%, which initially printed at 3.5%.

US Retail Sales are all that remains in the barrel for the remainder of the week's key data. Markets will be hoping for another firm print, with the monthly Retail Sales figure forecast to come in at a slight contraction of -0.1% compared to the previous 0.4%.

US President Donald Trump unveiled his latest strategy for boosting tax revenues amidst significant administrative tax cuts. The concept of "reciprocal tariffs"--imposing fees on countries that charge tariffs on American goods--is set to develop in the following months, with US Commerce Secretary Howard Lutnick designated to finalize the details.

The timeline for additional tariff threats remains unclear, and investors are treating these new tariff threats as unlikely to materialize, reminiscent of Trump's proposed "day one tariffs," as well as tariffs concerning Canada, Mexico, and specific imports like automobiles, microchips, and pharmaceuticals. Overall, while there are various ideas about implementing strict import taxes on US consumers and businesses to punish foreign businesses and countries, there has been limited real advancement, leading investors to speculate that this trend will persist.

EUR/USD price forecast

EUR/USD stepped into a third straight bullish day on Thursday, crossing the 1.0400 handle once again and climbing over the 50-day Exponential Moving Average (EMA) near 1.0425. Fiber has kicked into a near-term bullish tilt, but price action still remains on the low end of the last swing high into 1.0525 in mid-January.

EUR/USD daily chart