- EUR/USD remains steady as investors await the European Central Bank’s interest rate decision on Thursday.
- The ECB is anticipated to cut rates by another 25 basis points, lowering the Main Refinancing Operations Rate to 2.65%.
- The US Dollar struggles after disappointing US private payroll data heightened concerns over slowing US economic growth.
EUR/USD remains steady after registering gains for the last three consecutive sessions, hovering around 1.0790 during Thursday’s Asian trading hours. However, the Euro may face headwinds as the European Central Bank (ECB) is widely expected to implement another 25 basis point rate cut later in the day. This move would bring the Main Refinancing Operations Rate down to 2.65% and lower the Deposit Facility Rate to 2.5%.
In Germany, the CDU/CSU and SPD, following their election victory, have agreed to ease the country’s strict borrowing regulations. The decision aims to support defense spending above 1% of GDP and includes plans to establish a €500 billion off-budget fund to finance infrastructure projects over the next ten years.
The EUR/USD pair benefits from improved risk sentiment, as investors assess the likelihood of tariff relief for Canada and Mexico. On Wednesday, the White House announced that President Trump would temporarily exempt automakers in these countries from newly imposed 25% tariffs for one month. Additionally, Bloomberg reports suggest that he may consider excluding certain agricultural products from these tariffs.
Despite the EUR/USD’s current strength, geopolitical risks remain a limiting factor. Late Wednesday, a Chinese foreign ministry spokesperson asserted that China is ready to engage in “any type” of war in response to Trump’s escalating trade tariffs, according to BBC.
Meanwhile, the Federal Reserve’s (Fed) March Beige Book carries heightened significance amid growing concerns about the economic repercussions of Trump’s trade policies. Even before the full enforcement of these measures, signs of strain within the US economy are beginning to surface.
