As the US dollar struggles to continue rising despite waning concerns over upcoming US tariffs on April 2, EUR/USD finds support below 1.0800.
In March, the preliminary US S&P Global Services PMI saw a notable increase.
In April, the ECB is anticipated to lower interest rates once more.
During Tuesday's European trading hours, the EUR/USD finds a buffer around 1.0780. Despite US President Donald Trump's less expansive tariff plan and positive preliminary S&P Global Services Purchasing Managers Index (PMI) data for March, the main currency pair draws bids as the USD struggles to rise further.
Not all tariffs will go into effect on April 2, US President Trump told reporters at the White House on Monday. According to Trump, certain nations may be immune from higher import taxes. Market players have interpreted Trump's remarks favorably for riskier assets and the US dollar, anticipating that a limited trade war would have less of an impact on the world economy than first anticipated. Trump also reaffirmed that he will soon declare taxes on medicines, aluminum, and cars.
S&P Global stated on Monday that the Composite PMI increased sharply as a result of strong activity in the services sector offsetting the impact of an unexpected fall in the manufacturing sector. Compared to February's 51.0, the Services PMI increased to 54.3, a substantial increase. A little uptick in service sector activity to 51.2 was anticipated by economists. Given that it makes up around two-thirds of the US economy, the services sector is its backbone.
In the meantime, the US dollar has strengthened as a result of rising consumer inflation expectations brought on by Trump's trade policies. In an interview with Bloomberg on Monday, Atlanta Fed Bank President Raphael Bostic stated that he anticipates "just one interest rate drop this year" since he believes that businesses would be burdened by tariffs and that the disinflation trend is slowing down toward the 2% target. The dot plot in the Summary of Economic Projections of the March policy meeting indicates that Fed policymakers believe there will be two interest rate decreases this year.
Market movers for the daily digest: EUR/USD recovers but Euro continues to face pressure
Even if the euro (EUR) is trading carefully due to predictions that the European Central Bank (ECB) may lower interest rates once more in April, EUR/USD is still up a bit. In an attempt to defeat inflation this year, the ECB has lowered its benchmark borrowing rates six times since June.
In her testimony before the European Parliament Committee last week, ECB President Christine Lagarde stated that the inflationary effects of the Trump-led trade war are only temporary and will "ease in the medium term" as a result of "reduced economic activity reducing inflationary pressures."
Due to concerns that the US-Eurozone tariff war may result in higher inflationary pressures on the old continent for an extended length of time, traders have recently reduced their ECB dovish bets.
Regarding the economy, the March German IFO company Climate data, which is a preliminary measure of the state of affairs and company expectations, came in higher at 86.7 than the previous reading of 85.3 but fell short of projections of 86.8. The prognosis for the next six months is presented in the Expectations component, which rose from 85.6 in the previous publication to 87.7. Additionally, it fell short of the 87.9 predictions. IFO Current Assessment data exceeded the previous reading of 85.0 and estimates of 85.5 by coming in at 85.7.
In March, the preliminary US S&P Global Services PMI saw a notable increase.
In April, the ECB is anticipated to lower interest rates once more.
During Tuesday's European trading hours, the EUR/USD finds a buffer around 1.0780. Despite US President Donald Trump's less expansive tariff plan and positive preliminary S&P Global Services Purchasing Managers Index (PMI) data for March, the main currency pair draws bids as the USD struggles to rise further.
Not all tariffs will go into effect on April 2, US President Trump told reporters at the White House on Monday. According to Trump, certain nations may be immune from higher import taxes. Market players have interpreted Trump's remarks favorably for riskier assets and the US dollar, anticipating that a limited trade war would have less of an impact on the world economy than first anticipated. Trump also reaffirmed that he will soon declare taxes on medicines, aluminum, and cars.
S&P Global stated on Monday that the Composite PMI increased sharply as a result of strong activity in the services sector offsetting the impact of an unexpected fall in the manufacturing sector. Compared to February's 51.0, the Services PMI increased to 54.3, a substantial increase. A little uptick in service sector activity to 51.2 was anticipated by economists. Given that it makes up around two-thirds of the US economy, the services sector is its backbone.
In the meantime, the US dollar has strengthened as a result of rising consumer inflation expectations brought on by Trump's trade policies. In an interview with Bloomberg on Monday, Atlanta Fed Bank President Raphael Bostic stated that he anticipates "just one interest rate drop this year" since he believes that businesses would be burdened by tariffs and that the disinflation trend is slowing down toward the 2% target. The dot plot in the Summary of Economic Projections of the March policy meeting indicates that Fed policymakers believe there will be two interest rate decreases this year.
Market movers for the daily digest: EUR/USD recovers but Euro continues to face pressure
Even if the euro (EUR) is trading carefully due to predictions that the European Central Bank (ECB) may lower interest rates once more in April, EUR/USD is still up a bit. In an attempt to defeat inflation this year, the ECB has lowered its benchmark borrowing rates six times since June.
In her testimony before the European Parliament Committee last week, ECB President Christine Lagarde stated that the inflationary effects of the Trump-led trade war are only temporary and will "ease in the medium term" as a result of "reduced economic activity reducing inflationary pressures."
Due to concerns that the US-Eurozone tariff war may result in higher inflationary pressures on the old continent for an extended length of time, traders have recently reduced their ECB dovish bets.
Regarding the economy, the March German IFO company Climate data, which is a preliminary measure of the state of affairs and company expectations, came in higher at 86.7 than the previous reading of 85.3 but fell short of projections of 86.8. The prognosis for the next six months is presented in the Expectations component, which rose from 85.6 in the previous publication to 87.7. Additionally, it fell short of the 87.9 predictions. IFO Current Assessment data exceeded the previous reading of 85.0 and estimates of 85.5 by coming in at 85.7.
