Home Daily Commentaries Euro under pressure as US tariff threat escalates

Euro under pressure as US tariff threat escalates

See Wah Li
Written by
See Wah Li

See Wah Li

OFXpert

With more than 6 years of experience in the foreign exchange market, See Wah’s strength lies in developing effective solutions to help navigate the complexities of currency fluctuations.

| Thursday 27 February, 2025

Daily Currency Update

This morning, the euro slipped against the US dollar as markets reacted to heightened trade tensions between the US and the EU.

President Trump announced plans to impose a 25% tariff on EU imports, including automobiles and other key exports, raising concerns about potential economic fallout across Europe. The prospect of retaliatory measures and weakened trade flows has rattled investor sentiment, putting downward pressure on the euro.

With details of the tariff plan expected soon, FX markets are closely watching for potential policy responses from the ECB and EU leaders, as prolonged uncertainty could weigh further on the euro’s outlook.

Key Movers

FX markets are positioning for at least two Federal Reserve rate cuts in 2025, with 58 basis points of easing currently priced in. However, expectations remain tempered as the Fed signals patience, likely holding off for the next several months before making a move.

The timing and scale of rate cuts will be key drivers for the USD’s trajectory, with a delayed Fed pivot potentially offering near-term support for the dollar, while an accelerated easing cycle could drive weakness. Traders will closely watch upcoming inflation and labour market data for clues on the Fed’s next steps.

Expected Ranges

  • GBP/USD: 1.2625 - 1.2715 ▲
  • GBP/EUR: 1.2065 - 1.2135 ▲
  • GBP/AUD: 2.0085 - 2.0175 ▲
  • EUR/USD: 1.0425 - 1.0505 ▼

Written by

See Wah Li

OFXpert

See Wah is passionate about supporting positive transformations when it comes to managing foreign exchange. As a Senior Currency Consultant at OFX, his goal is to help businesses make informed decisions, alleviate risks, and enhance their currency strategies for success. With over 6 years of experience in the foreign exchange market, See Wah’s strength lies in developing effective solutions to help navigate the complexities of currency fluctuations and mitigate their impacts on business profitability.