EUR/USD: Euro Rallies 2% for Its Biggest Weekly Gain in 2 Years. Is There More Upside?

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By Tradingview

Trump’s comments at the Davos event for the uber-rich sparked hopes that China might be spared from tariffs.

Euro Logs Best Week in 2 Years

The EURUSD pair on Friday logged its best week since November 2022, up 2%, after comments from Trump assuaged fears around the new administration’s tariff policies. The euro briefly topped $1.05 before coming down a little to close Friday’s session at $1.0491. Early Monday, the exchange rate floated near $1.0460.
Speaking virtually at the Davos conference last week, where the uber rich gather each January, President Donald Trump said he would “rather not” slap China with lofty tariffs. Previously he said there could be up to 100% tariffs on all imports from China.

Dollar Pulls Back Against Rivals

The softer stance (potentially) toward China helped rejigger the forex landscape as the US dollar sold off across the board. The GBPUSD pair also rallied, much like its more popular peer, and topped $1.25, up 2.7% on the week.
The USDJPY was more collected due to the Bank of Japan’s interest rate hike, which failed to spark enthusiasm among traders. The muted reaction is largely a result of Japan’s central bank not following up with proper guidance right after it bumped rates to 0.50%.

Trump Jabs at Fed’s Powell

Back to US politics, which is likely to affect the US dollar a lot more than when Biden was President, Donald Trump made some questionable comments around monetary policy. “I think I know interest rates much better than they do, and I think I know it certainly much better than the one who’s primarily in charge of making that decision,” Trump said, obviously referring to Fed boss Jay Powell.
This said, the Fed holds its regular monetary policy meeting on Wednesday and is expected to leave interest rates unchanged at the currency level of 4.25% to 4.50%. Renewed uncertainty around interest rates could keep the US dollar under pressure as traders favor the euro.