Key points:
- Euro slides under $1.04 in busy week
- Euro-dollar breaks 50-day moving average
- Markets fear Trump may target eurozone
Fed holds rates, ECB cuts rates. GDP data on both sides of the Atlantic and Trump’s tariffs hit the currency markets this week.
🌊 Euro Dives Under $1.04
⚔️ EU GDP vs US GDP
- But more than that, the European Central Bank on Thursday dropped its benchmark interest rates by another 25 basis points to 2.75%. And, what’s even more, officials warned of “headwinds” for the European economy. An early sign of that warning was the quarterly GDP data, which flatlined, missing expectations of 0.1% growth.
- Stateside, the US also released its own GDP data, but flexed growth of 2.3% October through December. While it did miss estimates of 2.6%, it was a healthy clip and signaled a resilient economy.
🛑 Tariffs Dent Euro Optimism
- President Trump topped it off late Thursday by saying that the US is slapping a 25% tariff on Mexico and Canada, effective Saturday, February 1. The news didn’t sound good to euro buyers, who are now anticipating Trump to target the eurozone.
- It hasn’t been a great time to be a euro bull. The continued rate cutting actions from the ECB have knocked the wind out of the euro, leaving it vulnerable to speculation and attack.