Euro slips as trade tensions and ECB rate cut loom

The euro slipped to $1.040, retreating from a five-week high, as investors awaited further details on President Donald Trump’s policy agenda.

Euro slips as trade tensions and ECB rate cut loom

Early in his term, Trump refrained from implementing stricter trade penalties, alleviating fears that protectionist policies could hinder global growth and fuel higher US inflation. Instead, his emphasis on pro-business initiatives has bolstered investor confidence. Despite this, tensions linger, with Trump criticizing the EU as “very, very bad to us” and hinting at potential tariffs. In response, European Central Bank (ECB) President Christine Lagarde urged Europe to prepare for possible trade actions, commending Trump’s decision to postpone blanket tariffs as a “brilliant approach.”

ECB poised for 25bps rate cut next week

Meanwhile, the ECB is expected to maintain its accommodative stance, with markets forecasting a 25 basis point cut to the deposit rate at next week’s meeting.