The EUR/USD pair trades firmer near 1.1795 in early Asian trading on Tuesday, supported by a softer US Dollar (USD). Ongoing uncertainty surrounding US trade tariffs is weighing on the Greenback and helping the Euro (EUR) gain ground. Meanwhile, markets are also watching the US January Producer Price Index (PPI) report due later this week.
On Friday, the US Supreme Court invalidated several tariffs previously introduced by President Donald Trump. Despite the ruling, the administration signaled it will continue its trade stance and plans to introduce a fresh 15% tariff on Saturday.
In response, the European Union has taken a cautious approach. The European Parliament’s trade leadership indicated the EU may pause ratification of a trade agreement with the United States until greater clarity on Washington’s trade policy is provided. The renewed uncertainty around trade relations has pressured the USD and supported the currency pair.
European Central Bank (ECB) President Christine Lagarde stated Monday that policymakers must remain flexible when setting interest rates. She added that decisions will continue to be made on a meeting-by-meeting basis, noting that risks to the economic outlook currently appear balanced.
Attention now turns to the upcoming US PPI data, which could shape expectations for future Federal Reserve policy. Economists expect January producer inflation to ease compared with the prior month. However, a stronger-than-forecast reading could lend short-term support to the US Dollar.
