Euro retreats from three-year high as data-heavy week begins

The euro traded slightly below the $1.14 mark, pulling back from the three-year high of $1.1573 reached on April 21, as investors braced for a busy week of economic data and kept a close watch on developments related to global trade tensions.

Euro retreats from three-year high as data-heavy week begins

The pullback came as the dollar gained some ground, buoyed by signs of easing US-China trade tensions that emerged last week. Despite this, Beijing continued to reject President Trump’s claims that tariff negotiations between the two countries were progressing, maintaining a level of uncertainty in global trade dynamics that weighed on market sentiment. Looking ahead, market attention is shifting toward a series of key economic indicators scheduled for release this week. Investors will closely monitor inflation data from both the Eurozone and the US, with particular focus on how rising prices in both regions might influence central bank policies. Friday’s highly anticipated US nonfarm payrolls report will also be a critical data point, potentially offering fresh insights into the strength of the US labor market and its implications for future Federal Reserve actions.

Eyes on ECB moves

On the monetary policy front, the European Central Bank (ECB) made a noteworthy move last week, cutting its deposit rate by 25 basis points to 2.25%, marking the lowest borrowing costs since early 2023. This decision came amid growing concerns over slowing economic growth in the region, as the ECB also removed references to its policy stance being "restrictive." The central bank signaled that the economic outlook had deteriorated, citing rising global trade tensions as a significant factor contributing to the shift in its policy direction. Analysts are now questioning whether this move is part of a broader trend towards more accommodative policies in the Eurozone, or if it will be a temporary adjustment in response to current economic challenges.