The euro hovered near $1.03, close to its late 2022 lows, as the US dollar maintained its strength following Donald Trump’s inauguration as President.
Euro holds close to 2022-lows
While Trump initially refrained from imposing tariffs, he later revealed plans to introduce tariffs of up to 25% on Mexico and Canada starting February 1st, reigniting concerns over trade tensions and potential inflationary pressures. In Europe, ECB officials have emphasized caution regarding further rate cuts. Eurozone inflation rose for the third consecutive month to 2.4% in December, a largely anticipated increase due to favorable base effects from the previous year.
Eyes on ECB moves
Having already lowered rates four times since June, the ECB is expected to continue its easing policy over the next six months. Markets are currently predicting a 25 basis point reduction in the key deposit rate at the ECB’s upcoming meeting next week.
