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EUR/USD rallies for the second straight day, gains over 0.69% as the US Dollar gets ditched over US President Trump threats of imposing duties on European countries on his ambitions to take over Greenland. Economic data in Europe and the US take’s the backseat at the time of writing. The shared currency trades at 1.1724 late in the North American session.

Euro extends gains as escalating US–EU trade tensions revive the “Sell America” narrative

Market sentiment remains negative as the US and Europe escalate the ongoing trade war which began last Saturday, spurred by the White House, which threatened with 10% tariffs on imports of eight European countries.  Although Wall Street enjoyed a quiet session on Monday, due to a holiday, once the financial markets reopened, the S&P 500 and the Nasdaq, tumbled 2.1% and 2.39%, respectively.

In addition to this, global bond yields are soaring after Sanae Takaichi the Japanese Prime Minister revealed her intentions to cut taxes on food, triggering a Liz Truss moment. The Japanese 40-year bond yield soared nearly 29 basis points to a record high of 4.226% on Tuesday.

Data-wise, the US jobs market printed solid figures despite missing the mark according to ADP. In Europe, inflation on the producer side in Germany, plunged deeper into deflationary territory, while the ZEW Survey Economic Sentiment in Germany and the European Union (EU) showed signs of improvement.

What’s in the calendar on January 21?

The EU’s schedule will feature a speech of Christine Lagarde, the President of the European Central Bank (ECB), followed by speeches of ECB members Escriva, Villeroy, Nagel and Lagarde, once more. In the US, traders will digest Trump’s speech and housing data.

Daily digest market movers: Geopolitics tumble the Greenback as economic data is ignored

• The US Dollar Index (DXY), which tracks the performance of the American currency against other six, is down 0.58% at 98.56.
• US ADP Employment Change 4-weej average came at 8,000 below the previous week 11,750 people added to the workforce. After the data, the odds for a rate cut in January remained unchanged accordin to Prime Market Terminal data. For the rest of 2026, the swaps market had priced in 45 basis points of easing.
• Over the weekend, US President Donald Trump announced new tariffs of 10% tariffs effective on February 1 to eight countries including Denmark, Norway, Sweden, France, Germany, Finland, the Netherlands and the UK.
• Recently, Trump declined to detail his strategy over Greenland. When asked about how far he would go to acquier Greenland, he answered “you’ll find out.”
• Regarding the trade war, the European Union is reportedly preparing up to €93 billion in counter-tariffs on US goods and is also weighing measures that would restrict access for American companies to the European market, signaling a firm response to Washington’s latest trade actions.
• Germany’s economic confidence surged to ist strongest level since mid-2021 as the ZEW Economic Sentiment Index rose to 59.8 in January, up from 45.8 in the previous month. For the Euro area, the index increased from 33.7 to 40.8 points in January, exceeding estimates and reaching its highest level since July 20224.

Technical outlook: EUR/USD bulls conquer 1.1700, eyes on 1.1800

EUR/USD rallied to a fresh yearly high of 1.1763 and finished the day above the 1.1700 figure, which opens the door for further gains. In the short-term momentum shifted to neutral-to-upward biased as the Dollar losses its safety appeal on Trump’s trade war with the EU.

From a momentum standpoint, the Relative Strength Index (RSI) shows buyers gathering some strength as the index pierced above its neutral level. Therefore, the path of least resistance is upwards.

EUR/USD first resistance is 1.1750 followed by the 1.1800 mark. On the flip side, if the pair slides below the 20-day SMA at 1.1697, traders would target the 100-day SMA at 1.1662, followed by the 50-day SMA at 1.1660 and the 200-day SMA at 1.1588.

(Click on image to enlarge)

EUR/USD Daily chart

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