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EUR/USD is slipping to around 1.1680 during the Asian session on Friday.
Trump indicated that the EU will receive a letter regarding new tariff charges “today or tomorrow.”
ECB’s Holzmann stated that the central bank does not need to further reduce interest rates.
The EUR/USD currency pair is expected to decline further, nearing the 1.1680 mark in Friday’s Asian trading. This comes in light of President Donald Trump’s announcement about new tariff policies, applying pressure on the Euro (EUR) as uncertainty increases around these changes. Later on Friday, European Central Bank (ECB) officials Fabio Panetta and Piero Cipollon are scheduled to speak.
This week, Trump sent letters to over 20 countries outlining tariff rates, which include a significant 50% tariff on imports from Brazil and a 35% tariff for goods from Canada. Additionally, there’s a 50% tariff on copper imports set to take effect on August 1. Trump also mentioned that EU members will be notified of new tariff charges “today or tomorrow.”
As the EU is the largest trading partner of the United States, traders will likely stay attentive to any updates regarding US-EU tariff policies. Any increase in trade tensions could negatively impact the Euro in the short term.
Meanwhile, the ECB seems hesitant about further lowering interest rates, which might help to mitigate losses for the Euro. Robert Holzmann, a member of the ECB’s Management Council, noted that there’s no immediate need for policy easing as current borrowing costs may already be stimulating the economy.
Furthermore, ECB policymaker Joachim Nagel, who leans towards a more hawkish stance, mentioned that the current uncertainty is unlikely to dissipate anytime soon. He suggested that the central banks should proceed with caution, making decisions based on data at each meeting. The cautious approach of the ECB regarding interest rates could, in fact, bolster the Euro against the USD.
