Euro slightly up as markets await EU response to U.S. tariffs

The euro hovered just above $1.09 as investors paused to await clearer signals on how the EU plans to respond to U.S. tariffs. This came after two consecutive sessions of declines, fueled by a broader retreat from riskier currencies amid escalating trade tensions and deepening concerns over global growth.

Euro slightly up as markets await EU response to U.S. tariffs

On Monday, the European Commission revealed it had proposed a zero-for-zero tariff deal to the Trump administration in a bid to avert a trade war, with EU ministers agreeing to prioritize negotiations. However, the offer was rejected by Washington. Meanwhile, it has also proposed counter-tariffs of 25% on a range of U.S. goods, in response to President Donald Trump’s decision last month to impose levies on steel and aluminum. The euro’s muted performance reflects cautious sentiment in the currency markets, as traders grapple with rising geopolitical tensions and a cloudy economic outlook. Market participants are closely monitoring Brussels for signs of a unified and robust policy response, while also digesting the growing likelihood of monetary easing by the European Central Bank. A more dovish ECB, coupled with trade-related uncertainty, has capped euro upside for now.

China-U.S. turmoil

Elsewhere, Beijing vowed not to bow to what it described as U.S. "blackmail," after President Trump threatened to slap an additional 50% tariff on Chinese goods unless China rolled back its retaliatory measures by Tuesday. The standoff between the world’s two largest economies has added another layer of volatility to global markets, prompting a flight to safer assets and further dampening risk appetite across the board.