EUR/USD recovers from daily lows toward 1.0400 in the American session on Tuesday. Following the earlier rally, the USD struggles to preserve its strength as the bullish opening in Wall Street's main indexes point to an improving risk mood
After spending the European session under bearish pressure, EUR/USD gains traction and recovers toward 1.0400 in the American trading hours.
In the early Asian session on Tuesday, US President Donald Trump said that they could impose tariffs on China if they make a TikTok deal and China doesn't approve it. Additionally, he said that they are planning to impose 25% tariff on imports from Mexico and Canada as early as February 1. These remarks caused markets to adopt a cautious stance and allowed the US Dollar to benefit from safe-haven flows.
The bullish opening in Wall Street, however, made it difficult for the USD to gather further strength and opened the door for a recovery in EUR/USD. At the time of press, major equity indexes in the US were up between 0.3% and 0.5%.
In case risk rally picks up steam in the remainder of the session, EUR/USD could extend its recovery. On the flip side, a bearish reversal in stock markets could cap EUR/USD's upside.
Meanwhile, the data on Tuesday showed the headline German ZEW Economic Sentiment Index declined to 10.3 in January from 15.7 in December, missing the market consensus of 15.3. On a positive note, the Eurozone ZEW Economic Sentiment Index improved to 18 from 17 in December.
On Wednesday, European Central Bank President Christine Lagarde will participate in the dialogue 'Beyond Crisis: Unlocking Europe's Potential' during the World Economic Forum in Davos, Switzerland.(Cay) Newsmaker23
Source: Fxstreet
