The Euro advanced toward $1.05, reaching its highest level in over a month, as it gained support from a weaker dollar after President Trump appeared to soften his stance on universal tariffs and called for an immediate reduction in US interest rates.
Euro appreciates, ECB awaited by traders
This shift in rhetoric added downward pressure on the dollar, giving the Euro room to strengthen.
Adding to the positive sentiment, flash PMI data for the Eurozone and Germany showed encouraging signs of recovery. Private sector activity edged higher, and the downturn in manufacturing eased, suggesting that the region's economy may be stabilizing after months of contraction. The improvement in economic indicators bolstered hopes for a gradual rebound in growth across the Eurozone.
Focus on ECB
Looking ahead, the European Central Bank (ECB) is widely expected to announce another 25 basis point cut to its key deposit rate next week, following four rate reductions in 2024. This move underscores the ECB’s commitment to supporting the economy as inflation remains below target and growth challenges persist. Investors will also focus on any forward guidance from the central bank, as markets are pricing in additional rate cuts in the months ahead.
Geopolitcal news also affect euro
Beyond monetary policy, traders are keeping an eye on geopolitical and fiscal developments across the bloc, including ongoing discussions about joint investment initiatives and fiscal stimulus measures, which could further impact the Euro's trajectory. The combination of easing monetary policy and signs of economic resilience may provide the Euro with additional support in the near term.
