No significant events are expected today.

The EUR/USD pair bounced back from the decline seen during the Asian session, reaching the 1.0880 level, and appears to have paused its corrective pullback from the mid-1.1100 zone — the highest level since September, reached last week. Spot prices are currently trading around 1.0960, showing little change on the day amid mixed market sentiment.

The US Dollar (USD) failed to build on Friday’s recovery from a six-month low and started the new week on a weaker note amid speculation that the US economy might enter a recession, prompting the Federal Reserve (Fed) to restart its rate-cutting cycle. Markets are now pricing in four quarter-point rate cuts by the Fed in 2025. This, along with global flight-to-safety flows, is driving US Treasury yields sharply lower, which in turn weakens the USD and provides some support to the EUR/USD pair.

However, traders may refrain from placing aggressive bullish bets on the euro due to the risk of further escalation in the US-EU trade war. The 27-member bloc faces 25% import tariffs on steel, aluminum, and automobiles, along with reciprocal tariffs of 20% on nearly all other goods. On Monday, the European Commission is expected to present a list of US goods to be subject to retaliatory tariffs in response to Trump’s measures. These developments, along with global market turmoil, may support the dollar and cap gains for the EUR/USD pair.

Looking ahead, traders will watch for German industrial production and trade balance data, as well as investor confidence figures from the Eurozone by Sentix. However, the main focus will remain on trade-related developments, which are likely to influence broader risk sentiment and drive demand for the dollar. This, in turn, may provide short-term trading opportunities in the EUR/USD pair.

Recommendation: SELL at 1.0910, SL at 1.1000, TP at 1.0825.