The Euro experienced a significant surge, climbing over 2% to surpass $1.1, reaching its highest level since early October 2024. This increase is attributed to a general weakening of the US dollar, influenced by traders’ reactions to recently announced tariffs imposed by the US. However, looming tariffs on EU exports and the potential for countermeasures are creating uncertainty, while market participants are increasingly anticipating an ECB rate cut in the near future.
- The Euro jumped more than 2% to above $1.1, reaching its highest level since early October 2024.
- The Euro’s rise is linked to a general dollar weakness.
- The US is set to impose a 10% tariff on all imports, with higher rates for specific nations.
- The EU will face total tariffs of up to 20%.
- The European Commission President warned the measures would deliver “a major blow” to the global economy and confirmed the EU is preparing countermeasures.
- More than 20% of European Union exports go to the US.
- Germany is expected to be one of the most affected countries by the tariffs.
- Traders are pricing in a nearly 90% probability of a 25bps rate cut by the ECB in April.
- Expectations are for the deposit rate to fall to 1.82% by December.
The observed trends indicate a complex environment for the Euro. While a weaker dollar provided an immediate boost, the looming trade tensions and potential ECB policy adjustments introduce significant risks. The impact of tariffs on European exports, particularly from Germany, could negatively affect the Eurozone economy, potentially prompting further monetary easing. This could limit the Euro’s upside potential, despite its recent gains.