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.