Euro under pressure as US tariff threat escalates
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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 ▼