Trump Steps on the Gas with New Tariffs, Euro Slips
The euro exchange rate was trading around $1.17 at the start of this week, nearing its lowest level in three weeks. This weakening occurred after United States President Donald Trump announced a 30% tariff on European Union imports starting August 1. The statement immediately rocked the currency market, sparking concerns about prolonged trade tensions between the two sides.
However, Trump also signaled that the United States was still open to negotiations with the European Union. In response, the European Union stated that it remained committed to reaching a fair trade agreement. To allow room for dialogue, the EU decided to postpone retaliatory measures and extended the suspension of retaliatory tariffs until early August.
Meanwhile, on the monetary policy front, investors are awaiting the decision of the European Central Bank (ECB) at its meeting scheduled for next week. Currently, most market participants expect the ECB to leave interest rates unchanged. However, there are expectations that a single 25 basis point interest rate cut is still possible towards the end of 2025.
Although the euro has weakened in recent weeks, overall, the currency has still strengthened by around 13% against the US dollar so far this year. This strengthening was driven by a broad-based dollar weakening and growing confidence in the eurozone's economic outlook, particularly after Germany signaled plans to increase fiscal spending to boost economic growth.
Source: (ayu-newsmaker)
