Dollar pares gains on the day in European morning trade

It’s not the first time this week and it sure looks like traders are starting to come around to the idea that Trump’s bark is going to be worse than his bite, at least when it comes to tariffs. His earlier threat against the EU briefly sent EUR/USD lower to just under 1.0400 but the pair has bounced back now to test near-term resistance at around 1.0430 again:

The pair has struggled a little in getting above the 1.0430-35 region this week, which also coincides with the start of the year highs on 6 and 7 January as well. If buyers do claim a break here, it sets out a new range for the pair in saying that they aren’t too concerned with the tariff threats from Trump whatsoever.

For now, there is a sense that traders are shrugging off the risks but are still keeping a more cautious look. The dollar has largely erased gains on the day to be flat across the board mostly:

It’s a tricky moment for the dollar after the stronger start to the new year, only to be knocked back by the very same reason it climbed in the first place. The rally up until last week has lost its momentum but the rebound among other major currencies is still largely tentative for the time being as well.

Trump headlines look to be the name of the game and later this week he will be making a speech at the WEF in Davos. So, do keep an eye out for that alongside potential interview remarks and his many tweets in and outside of that.

This article was written by Justin Low at www.forexlive.com.