Fundamental Market Analysis for January 21, 2025 EURUSD

The Euro-Dollar pair remains in negative territory after cutting its recent losses, trading around 1.03800 during Asian hours on Tuesday. The Euro (EUR) remains under pressure amid prevailing expectations for the European Central Bank (ECB). Markets expect a 25 basis points (bps) rate cut at each of the ECB's next four meetings, driven by concerns over the eurozone's economic outlook and the belief that inflationary pressures will remain subdued.

The U.S. Dollar Index (DXY), which tracks the performance of the U.S. dollar against six major currencies, rose to 108.30 at the time of writing. The US Dollar recovered from recent losses in the previous session, helped by news that President Donald Trump intends to direct federal agencies to review tariff policy and assess the United States' trade relations with Canada, Mexico and China.

However, the dollar faced headwinds after Bloomberg reported that President Donald Trump will not immediately announce new tariffs after his inauguration on Monday. The U.S. Federal Reserve (Fed) is expected to keep the benchmark overnight rate in a range of 4.25 percent to 4.50 percent at its January meeting. However, investors believe that Trump's policies could lead to rising inflationary pressures, which could limit the Fed to another rate cut.

Trading recommendation: Watch the level of 1.04000, if consolidated above consider Buy positions, if rebounded consider Sell positions.