The euro is hovering near a three-week low around $1.03, pressured by persistent worries over escalating global trade tensions.
Euro weakens on trade, ECB worries
While the US recently postponed planned tariffs on Mexico and Canada, the implementation of tariffs on Chinese imports has gone ahead, prompting immediate retaliatory measures from Beijing. Market sentiment is cautiously optimistic that a potential phone call between Presidents Trump and Xi Jinping could offer a path towards de-escalation and potentially lead to a rollback of some tariffs. However, significant uncertainty remains. Adding to the euro's woes are the European Central Bank's dovish monetary policy stance and the growing expectation of further interest rate cuts.
Strong inflation overshadowed by ECB dovishness
These factors are outweighing positive news on the inflation front, with January's Euro Area inflation rising to 2.5%, exceeding forecasts, and core inflation holding steady at a robust 2.7%.
