{"id":39492,"date":"2026-01-19T16:33:00","date_gmt":"2026-01-19T08:33:00","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=39492"},"modified":"2026-01-19T16:33:00","modified_gmt":"2026-01-19T08:33:00","slug":"euro-rebounds-as-dollar-softens-on-tariff-risks","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-ca\/analysis\/euro-rebounds-as-dollar-softens-on-tariff-risks\/","title":{"rendered":"Euro Rebounds as Dollar Softens on Tariff Risks"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"559\" src=\"https:\/\/www.vtmarkets.com\/en-ca\/wp-content\/uploads\/sites\/13\/2026\/03\/Image_fx-2025-10-03T175502582-1024x559.png\" alt=\"\" class=\"wp-image-31522\" \/><\/figure>\n\n\n\n<p><strong>Key Points<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>EURUSD rebounds from a three-month low near 1.1580 as the US dollar weakens.<\/li>\n\n\n\n<li>Tariff threats tied to Greenland inject political risk but cap euro upside.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\" \/>\n\n\n\n<p>The euro edged higher toward <strong>1.1620<\/strong>, recovering from an earlier three-month low near <strong>1.1580<\/strong>, as confidence in the US dollar softened following renewed tariff threats from US President Donald Trump.<\/p>\n\n\n\n<p>The move reflects a modest unwind of long dollar positions rather than a decisive shift in euro fundamentals.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Hedge funds closed their bullish euro positions just days before US President Donald Trump threatened to impose new tariffs on European nations as he ramped up efforts to take over Greenland <a href=\"https:\/\/t.co\/fzeMVQLAhC\">https:\/\/t.co\/fzeMVQLAhC<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/2013068552287207450?ref_src=twsrc%5Etfw\">January 19, 2026<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Trump warned of imposing <strong><a href=\"https:\/\/t.co\/s1oB7vUmHV\" target=\"_blank\" rel=\"noopener nofollow\" title=\"\">10% tariffs on several European countries<\/a><\/strong> in an attempt to pressure Denmark over the future of Greenland.<\/p>\n\n\n\n<p>The rhetoric weighed on the dollar as markets reassessed trade and geopolitical risks, allowing EURUSD to stabilise after last week\u2019s decline.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Trade Risks Cloud the Euro Outlook<\/h2>\n\n\n\n<p>While the initial reaction supported the euro, upside remains constrained. Analysts have highlighted the potentially severe political and geopolitical consequences of any attempt to seize Greenland, warning that such actions could strain NATO cohesion and damage transatlantic relations.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Starmer is expected to reaffirm the UK\u2019s commitment to NATO in a press conference on Monday, after Trump threatened to impose tariffs on the UK and other European nations over Greenland <a href=\"https:\/\/t.co\/a2QAwySOfP\">https:\/\/t.co\/a2QAwySOfP<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/2013018109909635280?ref_src=twsrc%5Etfw\">January 18, 2026<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>From an economic perspective, the impact of tariffs would not be evenly distributed. Germany and the UK, which have the largest export exposure to the US, would likely feel the sharpest effects.<\/p>\n\n\n\n<p>Estimates suggest a <strong>10% tariff could shave around 0.1% off GDP<\/strong>, while a <strong>25% levy could reduce output by 0.2% to 0.3%<\/strong>. These risks have limited enthusiasm for sustained euro buying.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Retaliation Risks Add to Uncertainty<\/h2>\n\n\n\n<p>The European Union is reportedly considering retaliatory measures, including up to <strong>\u20ac93 billion in tariffs on US goods<\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">European Union member states are discussing several options for how to respond to President Donald Trump\u2019s latest tariff threat, including imposing retaliatory levies on \u20ac93 billion ($108 billion) of US goods, according to people familiar with the talks. <a href=\"https:\/\/t.co\/5PZRWtSkpW\">https:\/\/t.co\/5PZRWtSkpW<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/2012993540381401244?ref_src=twsrc%5Etfw\">January 18, 2026<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>While this signals a willingness to respond forcefully, it also raises the risk of a broader trade confrontation, which could weigh on euro area growth prospects if tensions escalate further.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Technical Analysis<\/h2>\n\n\n\n<p>EURUSD staged a sharp intraday recovery after bottoming out at <strong>1.15772<\/strong>, a move marked by a bullish engulfing candle and a corresponding spike in volume.<\/p>\n\n\n\n<p>The price has since pushed above all major short-term moving averages (<strong>MA5, MA10, MA20, MA30<\/strong>), now clustering around <strong>1.1626\u20131.1629<\/strong>, which may act as intraday support.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.vtmarkets.com\/en-ca\/wp-content\/uploads\/sites\/13\/2026\/03\/image-15-1024x474.jpg\" alt=\"\" class=\"wp-image-39493\" \/><\/figure>\n\n\n\n<p>The rally met resistance at <strong>1.16414<\/strong>, forming a minor double-top rejection in the short term. Price is now pulling back slightly, testing the 15-minute <strong>MA20<\/strong>.<\/p>\n\n\n\n<p>Volume has begun to taper off, suggesting cooling momentum for now.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Cautious Outlook<\/h2>\n\n\n\n<p>Near term, further gains in EURUSD are likely to depend on continued softness in the US dollar rather than a strong euro-specific catalyst.<\/p>\n\n\n\n<p>Any renewed escalation in trade tensions or geopolitical rhetoric could quickly reintroduce volatility, keeping the pair range-bound in the sessions ahead.<\/p>\n\n\n\n<p><strong>Learn more about trading <a href=\"https:\/\/www.vtmarkets.com\/forex\/\" target=\"_blank\" rel=\"noopener\" title=\"\">Forex Pairs<\/a> on VT Markets <a href=\"https:\/\/www.vtmarkets.com\/Insights\/\" target=\"_blank\" rel=\"noopener\" title=\"\">here<\/a>.<\/strong><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>EURUSD stabilises above 1.16 as US tariff threats dent dollar confidence and revive near-term euro demand.<\/p>\n","protected":false},"author":64,"featured_media":31522,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[31],"tags":[56,10],"class_list":["post-39492","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-euro","tag-forex"],"acf":{"acf_article_selection_author":""},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/39492","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/64"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=39492"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/39492\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/31522"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=39492"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=39492"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=39492"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}