The euro remains under pressure, holding below the 1.0500 level against the US dollar in European trading hours on Thursday. This comes as US President Donald Trump announced a 25% tariff imposition on the European Union, though details are yet to be clarified. Amid this geopolitical uncertainty, the markets await key economic data, including the European Central Bank (ECB) Minutes and US GDP revision, for further direction. Concurrently, the British pound also struggles, remaining below 1.2700 against the US dollar.
In recent days, the exchange rate has shown limited fluctuation despite tumultuous geopolitical and economic events. President Trump's unexpected announcement regarding tariffs has created confusion, with no specifics provided about the timing or affected countries. This uncertainty has contributed to a cautious mood in the markets, weighing down both the euro and the pound.
Market participants are now focused on central banks' decisions concerning interest rates, which remain a top priority for investors. The interest rate differential continues to favor the US dollar, and analysts predict this gap may widen in the coming months. This potential development keeps traders on edge as they navigate the complex economic landscape.
Disinflation trends appear to be spreading across the Eurozone, even as prices in the services sector continue to rise rapidly. In France, inflation likely eased in February due to a notable decrease in regulated electricity prices. However, despite these trends, buying the European currency on recent dips may not be advisable as current lows may not represent optimal entry points.
Today's economic calendar is particularly significant, with the release of the ECB Minutes and US GDP growth rate expected to provide critical insights. These announcements are anticipated to influence market sentiment and trading strategies in the short term. Traders will closely monitor these developments to gauge potential impacts on currency performance.
The broad strength of the US dollar adds further pressure to the euro and pound, with investors remaining cautious amid tariff uncertainties. President Trump's recent cabinet meeting remarks have only fueled speculation and uncertainty about future trade policies, leaving stakeholders searching for clarity.