EUR/USD rises as risk-premium of US Dollar diminishes

• EUR/USD edges slightly higher as the US Dollar declines, with investors seeming less fearful about President Trump's tariff threats.
• The FOMC Minutes showed on Wednesday that officials are concerned over upside risks to inflation.
• ECB's Schnabel expected the central bank to pause the policy-easing cycle.

EUR/USD ticks higher to near 1.0440 as the US Dollar (USD) declines in Thursday's European session. The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, falls to near 106.90. The Greenback appears to have resumed its downside journey after a mild recovery earlier this week as investors expect United States (US) President Donald Trump's tariffs agenda won't be much more terrifying than the market had anticipated.

Till now, President Trump has imposed 25% tariffs on steel and aluminum, 10% on all imports from China, and has threatened to introduce reciprocal tariffs, with a 25% levy on automobiles, semiconductors, and pharmaceuticals by April. Market participants had anticipated that Trump would force tariffs soon after returning to the White House.

Meanwhile, Donald Trump has mentioned that he refrained from imposing tariffs immediately to allow local manufacturers enough time to increase their operating capacity. Market experts believe that US trading partners would be able to negotiate a deal with Trump in the meantime, and the impact of tariffs would remain limited on the global economy.

Apart from Trump's tariff agenda, growing optimism over the Russia-Ukraine truce has also diminished the risk premium of the US Dollar. President Trump has agreed to hold more talks with Russia, including Ukraine and Europe, to end the war in Ukraine.

A Russia-Ukraine peace agreement would have a favorable impact on the Eurozone. The truce would improve the global supply chain and lower energy prices. The Eurozone used to be significantly dependent on Russia for energy imports before its war with Ukraine.

Daily digest market movers: EUR/USD ticks higher amid weakness in US Dollar

• EUR/USD edges higher as the US Dollar struggles for a firm footing even though Federal Open Market Committee (FOMC) minutes for the January meeting showed on Wednesday that policymakers hesitated to continue easing the monetary policy amid concerns over a sticky inflation outlook. 
• The FOMC Minutes revealed that producers will pass on the import tariff cost to consumers, according to the output policymakers have received from business owners. Such a scenario will increase inflationary pressures and allow the Fed to maintain a restrictive monetary policy stance for longer. Technically, hawkish FOMC Minutes should have supported the US Dollar, but Trump's economic policies are driving the asset. 
• In the Eurozone, traders have fully priced in three more interest rate cuts by the European Central Bank (ECB) by this summer. However, ECB executive board member Isabel Schnabel said on Wednesday that she expects the central bank could announce a "halt" in the monetary expansion cycle as risks to inflation have "skewed to the upside" while borrowing costs had eased a lot. Schnabel warned that domestic inflation was "still high" and wage growth was "still elevated", amid "new shocks to energy prices".
• Going forward, the major trigger for the US Dollar and the Euro (EUR) will be flash Purchasing Managers Index (PMI) data for February, which will be released on Friday. In Thursday's North American session, investors will focus on the Initial Jobless Claims data for the week ending February 14.

Technical Analysis: EUR/USD oscillates inside Wednesday's trading range

EUR/USD trades inside Wednesday's trading range around 1.0440 in European trading hours on Thursday. The 50-day Exponential Moving Average (EMA) continues to offer support to the major currency pair around 1.0430.

The 14-day Relative Strength Index (RSI) struggles to break above 60.00. A bullish momentum would activate if the RSI (14) manages to sustain above that level.

Looking down, the February 10 low of 1.0285 will act as the major support zone for the pair. Conversely, the December 6 high of 1.0630 will be the key barrier for the Euro bulls.