Euro Holds Three-Year High as Dollar Struggles

The US Dollar struggled to recover its major losses on Monday as investors remained cautious about the prospects of de-escalation in the US-China trade war, despite President Trump softening his tone and claiming that talks were underway.

US Treasury Secretary Scott Bessent said in an interview on Monday that it was up to China to de-escalate tariffs, while Trump insisted that progress had been made and that he had spoken with Chinese President Xi. The mixed signals from US officials, coupled with China’s denial of such claims, have heightened uncertainty around the trade talks.

Euro Benefits from Dollar Weakness

Ongoing uncertainty regarding trade war de-escalation continues to weigh on the US Dollar, despite a modest recovery last week. On Monday, the dollar weakened further.

Meanwhile, the Euro, the second most traded currency, has benefited from the weaker dollar. It has posted a significant gain in 2025, rising more than 11% from its lows in early January to reach highs near 1.1500 by mid-April.

Despite a slight pullback last week, with EURUSD trading near 1.1300, the Euro remains strong. This appreciation has been driven by fading confidence in the US Dollar amid tariff risks, as well as increased fiscal spending initiatives in Germany and across the Eurozone.

Can the Euro Extend Its Gains?

The Euro is holding near its three-year highs despite a recent pullback from the key psychological level of 1.1500. With the US Dollar likely to remain under pressure given the current market landscape, the Euro is expected to maintain its gains.

(EURUSD, Day-Chart Analysis; Source: Ultima Market MT5)

From a technical perspective, surpassing the 1.1210 major resistance level suggests that EURUSD could maintain its bullish outlook as long as it stays above this level. However, if it remains below 1.1570, it may signal a period of consolidation before another potential bullish extension.

On the other hand, a return below 1.1210 would indicate a loss of bullish momentum in EURUSD, potentially leading to a deeper pullback.

Investors Turn Attention to Non-Farm Payrolls

Investor focus will now shift to the upcoming U.S. non-farm payroll and job market data scheduled for this week.

If the labor market shows significant signs of slowing, it could raise concerns over the U.S. economy, further weakening the dollar and favoring the euro, potentially leading to more upside. Conversely, stronger-than-expected labor data could push the euro back below the 1.1210 level.

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