EUR/USD breaks below 1.12 as USD rebounds on trade commitment headlines – Danske Bank

EUR/USD slipped below 1.12 as a Bloomberg report helped the USD recover ground, but confidence in the greenback remains fragile ahead of key US data releases, Danske Bank's FX analysts report.

Negative risk premium still weighs on USD despite bounce

"EUR/USD dropped below 1.12, as the broad USD trimmed losses following a Bloomberg report indicating that the US is not pursuing currency-related commitments in trade accords. However, a negative risk premium remains embedded in the USD, which continues to trade meaningfully away from fundamentals and pre-Liberation Day levels, reflecting eroding confidence in the greenback."

"Today's focus turns to a batch of US data, including April retail sales and PPI. Looking ahead, easing tariff developments and stretched short aggregate USD positioning could result in a choppy path toward further USD depreciation."