EUR/USD remains in negative territory after paring recent losses, trading around 1.0380 during Asian hours on Tuesday (1/21). The euro (EUR) remains under pressure as dovish expectations for the European Central Bank (ECB) continue to dominate. Markets are pricing in a 25 basis point (bps) interest rate cut at each of the next four ECB policy meetings, driven by concerns over the Eurozone economic outlook and the belief that inflationary pressures will remain subdued.

These dovish bets have increased due to growing confidence that Eurozone inflation will return sustainably to the ECB's 2% target, coupled with rising uncertainty around potential tariff policy from the United States (US).

The US Dollar Index (DXY), which tracks the performance of the US dollar against a basket of six major currencies, was up around 108.30 at the time of writing. The greenback regained some ground after recent losses in the previous session, supported by news that President Donald Trump intends to direct federal agencies to review tariff policies and evaluate the United States' trade relations with Canada, Mexico and China. (AL)

Source: FXstreet