The euro dipped below $1.09, retreating from four-month highs reached earlier this month, as traders closely follow escalating trade tensions and geopolitical risks.
Euro edges lower as tariffs threat mounts
The latest flashpoint came when President Trump threatened to slap a 200% tariff on all EU wines, champagnes, and other alcoholic beverages in retaliation for the bloc’s newly announced tax on US whiskey. This move has heightened fears of a broader transatlantic trade dispute, which could weigh on economic growth and investor sentiment.
At the same time, market participants are monitoring developments in Ukraine, where Russia has pushed back against a US-brokered temporary ceasefire, raising concerns of further instability in the region. This geopolitical uncertainty has fueled demand for safe-haven assets, adding to pressure on the euro.
Concerns on German Parliament situation
In Germany, Parliament is engaged in intense debates over a new fiscal package, which includes a €500 billion infrastructure fund aimed at boosting key sectors like transportation, defense, and energy. The euro has found some support from expectations of increased defense spending across Europe, particularly in Germany, as governments respond to rising security concerns. Additionally, signs that the European Central Bank's monetary easing cycle may be nearing its conclusion have provided further backing to the common currency, as investors weigh the possibility of a shift in interest rate policy.
