The EUR/USD pair saw a slight pullback on Wednesday, retreating by approximately 0.25% as US President Donald Trump renewed his tariff threats, now extending them to the European Union.
In a fresh wave of trade policy announcements, Trump introduced the prospect of a 25% tariff on European imports, including cars and other unspecified goods. While the specifics remain unclear, the US president emphasized that Canada and Mexico would also face 25% tariffs, with the measures set to go into effect on April 2. Trump also reiterated that the US does not rely on Canadian crude oil or lumber, further escalating trade tensions.
The US administration’s stance has significantly reduced the number of trading partners not facing tariff pressure. Should these tariff threats materialize into a full-scale trade conflict, the Euro would be added to a growing list of currencies vulnerable to heightened volatility, driven by shifting investor sentiment as the White House continues to announce frequent policy changes.
This week, while UK data remains light, investors are turning their attention to a wealth of US economic releases. Thursday will see the release of US GDP growth figures for Q4 2024, along with January’s Durable Goods orders data.
The most significant data point for markets will come on Friday with the release of the US Personal Consumption Expenditure (PCE) inflation report. After a sharp spike in inflation indicators early in 2025, market participants are eager to assess whether these pressures will influence core inflation readings.
EUR/USD remains in a high-range trading pattern, holding above the 50-day Exponential Moving Average (EMA) at 1.0450, although resistance around the 1.0550 level is limiting any significant upward momentum.
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