EUR/USD Reverses Gains as US Dollar Recovers from Lows

EUR/USD Drops as Dollar Rebounds Post Moody’s Downgrade

EUR/USD gave up earlier gains and retreated to around 1.1230 on Tuesday, as the US Dollar (USD) staged a recovery during the North American session. After opening on the backfoot due to Moody’s recent downgrade of the US sovereign credit rating, the Greenback found renewed demand near the 100.00 level on the US Dollar Index (DXY), erasing earlier losses.

Moody’s downgraded the US credit rating from Aaa to Aa1 last Friday, sparking market concerns about the nation’s $36 trillion debt burden and widening fiscal deficits. Investors are increasingly uneasy about President Trump’s proposed “Big Beautiful Bill,” which could add an estimated $3–$5 trillion to the national debt, further pressuring US fiscal outlook.

Meanwhile, in Europe, the European Commission maintained its forecast for inflation to average 1.7% in 2026. However, this failed to provide meaningful support to the euro amid the broader shift in sentiment favoring the US Dollar.