The US dollar showed a significant decline in value in Monday trading, missing expectations to continue its excellent performance last week.
This was due to a conflict in a report reported by the Washington Post newspaper that stated that the tariffs to be imposed by Donald Trump would be focused on critical sectors only.
However, Trump appeared to deny the news on his Truth Social media platform, stating that it was an example of fake news.
The significant depreciation of the US dollar has again opened space for other major currencies in the market to recover, including European currencies such as the Euro.
In addition to the weak US dollar, the Euro also received additional support from German inflation data published with increased figures in the European session yesterday.
Examining the EUR/USD currency pair chart, the price has managed to recover from last week's decline which has reached a 3-year low around 1.02250.
After starting trading at the 1.03000 zone in the Asian session opening early yesterday, the price managed to jump 130 pips to surpass the 1.04000 target, but fell back below that zone at the close of the New York session.
The price remained flat below 1.04000 as trading resumed at the opening of the Asian session this morning (Tuesday).
If yesterday's upward pattern continues, the 1.04300 high will be overcome for the price to record another new high.
The target is for the price to head towards the focus zone before the FOMC meeting last December, which is at 1.05000.
However, if the US dollar manages to regain its strengthening momentum, the price is likely to be pressured back down to around 1.03000.
A signal to extend the decline lower could target the 1.02000 zone for a new record low in price.
