EURUSD has been swinging due to conflicting news since the start of February. Yesterday was a significant day as new information came to the market’s attention, though it was largely ignored for the moment. 

First, U.S.-Ukraine relations are not going well. After Zelenskiy rejected Trump’s mineral offer, saying, “I will not sell out my country,” Trump called Zelenskiy a “dictator.” Earlier in February, EURUSD initially rallied on hopes of a potential deal to end the Ukraine-Russia war, but now the situation is developing in a different direction. European leaders are increasingly discussing higher military spending, it will increase especially after the German elections. The European Union will likely take steps in this direction, which could be positive for the future of the union but might also strain EU member states’ budgets and weigh negatively on EURUSD. 

Another key development was a potential shift in rhetoric from the ECB. European Central Bank (ECB) Executive Board member Isabel Schnabel, who is highly respected among economists, suggested that it may be time to discuss where to pause or end rate cuts. While she believes the rate cuts will continue, she indicated that the ECB is approaching a point where ECB should hold. So far, markets have barely priced in this shift, but if supported by incoming data, it could slow EURUSD’s overall decline. 

Additionally, a new headline emerged from Elon Musk, specifically a response on X regarding DOGE. Musk claimed he would discuss distributing $5,000 checks to taxpayers from DOGE savings, totaling $400 billion as a dividend. For context, this compares to Trump’s COVID stimulus checks under the CARES Act ($290 billion) and Relief Bill ($164 billion), as well as Biden’s American Rescue Plan ($411 billion). Given today’s different inflationary and debt conditions, such a check could have significant inflationary effects, which in turn might have a positive impact on EURUSD in the medium term, at least until the Fed reacts. Trump has also stated that he is considering returning 20% of total savings. 

(EURUSD 60H Chart) 

With all this information, along with the potential incoming tariffs from the U.S. on the EU and the likely retaliatory measures, EURUSD traders can expect heightened volatility over the next few months. 

In the short term, a clear uptrend channel has formed, and a local correction is underway within this trend. If EURUSD continues to retreat along the red trendline toward the lower boundary of the channel, the 1.0370–1.04 zone could present a good buying opportunity for Euro bulls. 

For those looking for a safer entry, a breakout above the red trendline could serve as a clearer signal. However, if the 1.0370–1.04 zone breaks down, the upward pressure on EURUSD may begin to dissipate.