EUR/USD remains under pressure and staying below the 1.0800 level in European trading on Wednesday. The duo contends with mounting pressures as the appetite for the US Dollar continues to grow. Adding fuel to this fire is the market’s reaction to President Trump’s most recent tariff threats. Traders have their eyes glued to the FX market. They’re looking at the effects of currently dovish talk from the European Central Bank (ECB) and very important data coming out in the next weeks may affect their plans.
The current state of EUR/USD demonstrates how traders react to a cocktail of economic and political concerns. By extension, this major currency pair serves as a key barometer of the global economy. The ECB's dovish comments have contributed to the pair's decline, adding pressure before the release of significant US data and anticipated statements from Federal Reserve officials, known as Fedspeak. There’s a lot of market attention on the Core Personal Consumption Expenditures (PCE) price index. That important inflation measure, the Fed’s favorite, will be out later this week.
Additionally, reports and rumors around President Trump’s impending announcement on reciprocal tariffs have been driving much of the markets’ moves. The forthcoming announcement could by design remain a powerful force in shaping market sentiment, leaving traders wary and on their toes in search of the right trading strategy.
In the UK, the Office for National Statistics (ONS) announced the fourth consecutive fall in annual Consumer Price Index (CPI) inflation. The rate decreased to 2.8% in February, a decrease from the 3% recorded in January. The number was well below the 2.9% market consensus. Consequently, GBP/USD dipped mildly, trading under 1.2950 in the first half of the European morning. With the inflation reading coming in worse than expected, this has made it difficult for Pound Sterling to gather a bid tone in the markets.