Euro price holds near $1.13 as tariff uncertainty pressures dollar, yen strengthens on safe-haven demand
EUR/USD hovers near 1.13 as U.S.-China tariff uncertainty weighs on dollar strength
The euro rebounded slightly on Thursday after a two-day decline, with EUR/USD holding near 1.13 during European trading hours. The move comes as investors digest conflicting signals from Washington over a possible de-escalation in U.S.-China trade tensions.
While President Donald Trump suggested openness to lower tariffs to foster negotiations, Treasury Secretary Scott Bessent clarified that no formal talks had begun and warned against expecting unilateral tariff reductions.
The U.S. dollar, which had staged a recovery earlier this week, struggled to sustain gains above the 100.00 mark on the DXY index. The dollar remains pressured by concerns that tariffs are accelerating corporate price hikes, limiting the Federal Reserve’s room to lower interest rates.
Meanwhile, the euro received modest support from stronger-than-expected German IFO business sentiment data and ECB officials signaling confidence in a return to the 2% inflation target. Still, ECB policymakers such as Joachim Nagel and Olli Rehn warned of rising risks, including a potential mild German recession and more aggressive rate cuts if necessary.
EURUSD, USDJPY & AUDUSD price dynamics (Source: TradingView.)
USD/JPY dips as risk sentiment sours, AUD stabilizes
The Japanese yen gained ground against the greenback, with USD/JPY falling past 143.00 after two days of losses. Renewed investor caution over global trade talks and Washington’s stance toward Tokyo helped fuel demand for the safe-haven currency. Reports that the U.S. declined to grant Japan exemptions under its current tariff regime added to the yen’s momentum, despite stronger domestic services data.
The Australian dollar held near $0.636, paring earlier volatility as hopes of trade negotiations supported sentiment. While upbeat domestic PMI figures helped, broader uncertainty around U.S.-China tariff clarity capped the Aussie’s upside.
Outlook remains fragile ahead of U.S. data and trade signals
Traders now await further clarity on U.S.-China negotiations and upcoming U.S. economic data, including durable goods orders and jobless claims. With currency markets reacting sharply to each policy nuance, the euro, yen, and Aussie are expected to remain sensitive to headlines through the end of the week.
In earlier analysis, we highlighted how EUR/USD had extended gains to 1.1575 before entering correction. Current support near 1.1300 marks a crucial level to watch, with further downside risking a test of 1.1276, while 1.1600 remains the bullish target if momentum resumes.
