Key events today:

14:00 UTC: USD – ISM Manufacturing Index

On Monday, the EUR/USD pair faced strong selling pressure, dropping to 1.0200 in early Asian trading. Spot prices returned to the lowest level in more than two years, last seen in January, and appear to be continuing their months-long downward trend.

The US dollar (USD) is strengthening across the board in response to President Donald Trump’s decision over the weekend to impose 25% tariffs on Canada and Mexico, along with an additional 10% tariff on China. This marks the beginning of a new global trade war and dampens investor appetite for risk assets. The wave of risk-off sentiment is providing strong support for the safe-haven dollar, which is a key factor putting downward pressure on the EUR/USD pair.

Meanwhile, on Friday evening, Trump announced tariffs on European Union goods, adding to the bearish outlook for the euro. The European Central Bank (ECB) continues to weaken the common currency, as expected, having cut borrowing costs by 25 basis points last Thursday while keeping the door open for further rate cuts later this year.

The recent sharp pullback in US Treasury yields acts as a headwind for the dollar and could offer some support to spot prices. However, the fundamental outlook suggests that the path of least resistance for spot prices remains to the downside.

Recommendation: Trading is primarily recommended with Sell orders from the current price level.