EUR/USD Tests 2-Week Highs as Trump Tariff Speculation Weighs on Dollar

EUR/USD is testing two-week highs as the euro benefits from renewed dollar weakness driven by speculation surrounding potential Trump tariff adjustments, referred to in market circles as the 'TACO' scenario. The pair has pushed higher during early Monday trading as traders reassess the impact of evolving US trade policy on the greenback. Uncertainty around tariff implementation timelines and scope has contributed to a risk-repricing environment, with the US Dollar Index futures trading under pressure. The dollar's vulnerability stems from concerns that aggressive trade measures could slow US economic growth, potentially influencing the Federal Reserve's monetary policy trajectory. Meanwhile, crude oil markets remain a secondary factor, with WTI futures adding to the broader macro picture. The euro's advance comes despite mixed Eurozone fundamentals, suggesting the move is primarily dollar-driven. Traders should watch for further clarity on US trade policy developments, as any concrete tariff announcements could trigger sharp directional moves in EUR/USD and related dollar pairs.