• EUR/USD remains close to 1.1730 highs after rallying above 1% in two days.
• The German and Eurozone ZEW Economic Sentiment Surveys have improved beyond expectations.
• Trump's latest tariff threat has triggered a "Sell America" trade.

EUR/USD has pulled back from session highs at 1.1730 but remains above 1.1700 at the time of writing, after rallying beyond 1% over the last two days. An upbeat ZEW Economic Sentiment Survey and the US Dollar (USD) reversal followed. US President Donald Trump's threat of additional tariffs on European countries has triggered a "sell America" trade that keeps the Euro buoyed.

Markets remain risk-averse as Trump celebrates the first year of his second term, confirming his will to impose 10% additional tariffs on European countries opposing his plans to annex Greenland. The Eurozone leaders, in the meantime, are meeting in Brussels to discuss how to retaliate against Trump's threat amid an unprecedented trade war between Western allies.

In the Eurozone, the German ZEW Survey, released earlier on the day, revealed that the investors' sentiment about the German economy improved to 59.6 in January, its best reading in more than four years, from 45,8 in December, and bearing expectations of a 50 reading. The sentiment about the current economic situation has improved to -72.7 from -81 in the previous month, well above the consensus -75.5 .

Likewise, the sentiment about the Eurozone's economy has improved to 40.8 from 33.7 in December, lso beating expectations of a 35.2 reading.

The US markets will be reopening after a long weekend on the Martin Luther King Jr. holiday. Still, the US economic calendar is practically empty, with the only release being the ADP weekly report on private-sector employment, and all eyes will be set on President Trump's speech at the Davos forum on Wednesday.

Daily Digest Market Movers: Tariff threats hit the Dollar and boost the Euro, for now

• Trump's threat of additional tariffs on European countries has triggered a new round of the "Sell America" trade. Investors are selling the US Dollar and US Treasury yields in a de-dollarisation process as confidence in the US authorities fades. This has sent the Euro (EUR) up by nearly 1% against the US Dollar in two days.
• Denmark's Minister of Economy Stephanie Lose affirmed on Monday that they will keep trying to engage in dialogue with the US, but that if it keeps escalating tensions, it will be a European response at some point.
• Data released by Destatis on Tuesday revealed that the German Producer Prices Index contracted 0.2% in December, beyond the -0.1% expected, following a flat reading in November. Year-on-year, producer prices fell at a 2.5% pace, from -2.3% in November and also beyond the -2.4% reading anticipated by the market consensus. The Euro has continued to appreciate after the data.
• Later on Tuesday, the German ZEW Survey is expected to show that institutional investors' sentiment about the economy continued to improve, reaching 50 in January, which would mark its best reading since July last year, from 45.8 in December and 38.5 in November.
• On Monday, the final Eurozone Harmonised Index of Consumer Prices (HICP) was revised down to 1.9% year-on-year growth in December, from previous estimates of a 2% reading. The core HICP, however, confirmed a 2.3% year-on-year growth. Monthly inflation was left unrevised at 0.2% and 0.3%, respectively.

Technical Analysis: EUR/USD bulls aim for the 1.1740 area

EUR/USD is trading near 1.1720 after hitting session highs at 1.1730¡. The 4-hour Relative Strength Index (RSI) has reached overbought levels, hinting at an overstretched rally, but the Moving Average Convergence Divergence (MACD) keeps trending higher above zero, with its histogram expanding.

The pair might find resistance at the January 6 high in the 1.1740 area, ahead of the January 2 high, at 1.1765. Further up, the December 16 and 24 highs, right above 1.1800, would come into focus. A bearish reversal might find support at the reverse trendline, now at the 1.1660 area ahead of the 1.1635 intra-day level.

(The technical analysis of this story was written with the help of an AI tool.)

(This story was corrected on January 20 at 12:35 GMT to say resistance was at the December 16 and 24 highs, right above 1.1800, and not December 18 and 24, as previously reported)