The EUR/USD pair dipped slightly to around 1.0415 during Wednesday’s Asian trading session, with the Euro (EUR) under pressure against the US Dollar (USD). This decline follows US President Donald Trump’s announcement of potential tariffs on the European Union (EU). Traders now await a speech from European Central Bank (ECB) President Christine Lagarde later today for further market direction.
On Tuesday, Trump stated his intention to impose 25% tariffs on Canada, Mexico, China, and the European Union starting February 1, citing trade deficits with the US as a key concern. European Commission President Ursula von der Leyen underscored the need to safeguard EU-US trade relations, noting that the transatlantic partnership accounts for €1.5 trillion in trade and significant mutual investment, highlighting the stakes for both sides. Trump’s policies could bolster the USD, adding further pressure on the Euro.
Market sentiment around the ECB also weighs on the EUR. Speculation of a dovish policy shift persists, with expectations of a rate cut on January 30 and a potential reduction in the benchmark rate to 2% by year-end. ECB policymaker Boris Vujčić stated on Monday that market expectations of rate cuts are justified, while inflation risks remain broadly balanced.
