EUR/USD extends upside as Dollar suffers from US credit score downgrade

• EUR/USD extends its upside to close 1.1250 because the US Greenback continues to face strain as a result of US Sovereign Credit standing downgrade.
• Washington highlights Huawei-made AI chips as a risk to US export controls.
• The EU’s government arm sees inflation averaging 1.7% in 2026.

EUR/USD beneficial properties additional to close 1.1250 in Tuesday’s European session, following the day gone by’s upside transfer. The most important foreign money pair stays on the frontfoot as america (US) Sovereign Credit score downgrade by Moody’s continues to batter the US Greenback (USD), with the US Greenback Index (DXY) extending its draw back to close 100.00.

On Friday, Moody’s downgraded the US credit standing by one notch to Aa1 from Aaa. This transfer shifted the main focus of monetary market contributors to the rising $36 trillion US authorities debt pile and financial imbalances, which might result in a long-term improve in the price of capital for the US administration.

Traders are apprehensive that the US debt points are anticipated to widen additional, with US President Donald Trump’s “large lovely invoice” seemingly including $3 trillion-$5 trillion to the already large debt stress.

This has renewed considerations over the US Greenback’s credibility, which has already been battered by “ever-changing” headlines on the tariff coverage by Washington.

In the meantime, recent considerations over de-escalation within the US-China commerce battle have additionally weighed on the Dollar. Earlier within the day, China accused the US of discouraging using Huawei-made Synthetic Intelligence (AI) chips and Chinese language AI fashions, highlighting them as a risk to US export management.

In keeping with a Chinese language Commerce Ministry spokesperson, the US Commerce Division’s recommendation is “discriminatory” and “market distorting,” prompting Beijing to “demand” that the administration “right its errors.” Beijing warned that feedback from Washington pointing to Chinese language-made chips as a risk undermine the commerce settlement, which happened in Geneva final weekend.

Every day digest market movers: EUR/USD beneficial properties whereas EU’s government arm sees inflation beneath 2% in 2026

• Additional upside within the EUR/USD pair can also be pushed by some Euro (EUR) power. The most important foreign money pair continues to draw bids regardless that the manager arm of the European Union (EU) has warned of dangers to inflation undershooting the European Central Financial institution’s (ECB) goal of two%.
• The spring forecast report launched by the EU’s government arm on Monday confirmed that client inflation will return to the two% goal by the center of the 12 months, averaging round 1.7% in 2026. In keeping with the report, decrease vitality prices, the rerouting of Chinese language items, and a stronger Euro shall be answerable for draw back dangers to inflation.
• A slew of ECB officers have additionally warned of dangers to inflation skewing to the draw back and have argued in favor of extra rate of interest cuts. ECB governing council member Isabel Schnabel, who has often been a hawk, has additionally expressed confidence that “disinflation is on observe” in her feedback throughout European buying and selling hours. Nonetheless, Schnabel nonetheless believes that tariffs by the US will pose “upside dangers to inflation within the medium time period”. 
• This week, buyers will give attention to the preliminary HCOB Buying Managers’ Index (PMI) information for Might, which shall be revealed on Thursday. In keeping with the estimates, the general enterprise exercise is predicted to have grown at a sooner tempo than in April. Within the US economic system, preliminary S&P World Composite PMI is estimated to have grown steadily.

Technical Evaluation: EUR/USD holds key 20-day EMA

EUR/USD strikes greater to close 1.1250 on Tuesday. The near-term outlook of the pair is bullish because it holds the 20-day Exponential Transferring Common (EMA), which is round 1.1214.

The 14-period Relative Power Index (RSI) oscillates contained in the 40.00-60.00 vary, suggesting indecisiveness amongst merchants.

Wanting up, the April 28 excessive of 1.1425 would be the main resistance for the pair. Conversely, the psychological degree of 1.1000 shall be a key assist for the Euro bulls.