The EUR/USD pair remains under pressure on Tuesday, trading below 1.0400 as risk-off sentiment and sustained US Dollar (USD) demand weigh on the Euro. After gaining over 1% on Monday, the pair has given up its momentum amid renewed geopolitical and trade concerns.

The USD rallied following US President Donald Trump’s comments threatening tariffs on imports from Mexico and Canada, as well as potential penalties on China if a TikTok deal is not approved. This aggressive trade stance revived demand for the safe-haven Greenback in Asian trading hours, dragging EUR/USD lower.

Despite the USD’s broad strength, the Euro finds some relative support as EUR/CAD and EUR/MXN see gains, reflecting capital flows from the Canadian Dollar and Mexican Peso into the Euro. However, the overall negative sentiment limits EUR/USD’s recovery potential.

The absence of significant US economic data on Tuesday leaves risk perception as the primary market driver. Investors will closely monitor Wall Street’s performance for clues on sentiment. If US equity markets extend losses after the holiday weekend, the USD could maintain its upward trajectory, pressuring EUR/USD further.

Trade Idea:
Consider selling EUR/USD on a break below 1.0375, targeting 1.0330, with a stop-loss at 1.0415. Watch for Wall Street’s reaction to trade developments and overall risk sentiment for confirmation.