EUR/USD trades in negative territory around 1.0415 in Wednesday’s early European session.
Trump tariff threats drag the Euro lower against the USD.
The ECB is anticipated to cut the interest rates at its January meeting.
The EUR/USD pair drifts lower to around 1.0415 during the Asian trading hours on Wednesday. The Euro (EUR) weakens against the US Dollar (USD) after US President Donald Trump vowed to hit the European Union (EU) with tariffs. Later on Wednesday, traders will keep an eye on the European Central Bank’s (ECB) President Lagarde speech for fresh impetus.
Late Tuesday, Trump said that he would impose 25% tariffs against Canada and Mexico, as well as duties on China and the European Union on February 1. Trump said that the EU and other nations have troubling trade deficits with the US. European Commission president Ursula von der Leyen emphasized the importance of preserving trading relations between the EU and the US. With a trading volume of €1.5 trillion and significant transatlantic investment, "a lot is at stake for both sides.". A stronger USD is another likely outcome of Trump's policies, which could weigh on the shared currency.
Additionally, the dovish expectation from the ECB might contribute to the EUR’s downside. Traders expected the ECB to deliver a rate cut on January 30 and see the benchmark down at 2% by the end of the year. ECB policymaker Boris Vujcic said on Monday that market expectations for ECB interest rate cuts are reasonable and risks around the inflation outlook are broadly balanced.
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