The EUR/USD currency pair has continued its upward trajectory following Friday’s rebound from the 1.1750-1.1740 range, marking a near one-month low. As the new week unfolds, the pair is benefiting from increased buying interest, pushing it towards the 1.1835 mark during Asian trading sessions. This positive shift is largely driven by the broad depreciation of the US Dollar (USD).
Despite a setback from the judiciary, US President Donald Trump remains committed to his trade policies, quickly introducing a new 15% tariff framework. This follows the Supreme Court's decision on Friday that Trump lacked the authority under the International Emergency Economic Powers Act (IEEPA) to impose extensive reciprocal tariffs. The swift introduction of tariffs has sparked concerns about the potential negative economic impacts stemming from escalating trade tensions.
Additionally, disappointing US GDP data has overshadowed strong inflation numbers, pulling the USD back from a four-week peak and providing a boost to the EUR/USD pair for the second consecutive day. The initial estimate for the fourth-quarter GDP highlighted a significant slowdown in the US economy at the end of 2025, partly attributed to the record-long government shutdown. Annualized GDP growth plummeted to 1.4% for the October-December period, down from 4.4% in the previous quarter, and fell significantly short of market expectations.
Meanwhile, the US core Personal Consumption Expenditure (PCE) Price Index increased by 0.4% in January, with the annual rate climbing to 3.0%, the highest since November 2023. This inflation data might lead the Federal Reserve to maintain current interest rates in their upcoming policy meeting in March. However, traders are increasingly betting on the possibility of interest rate cuts by the US central bank, anticipating a reduction in borrowing costs in June and at least two 25-basis-point cuts in 2026. This speculation further weakens the USD, thereby supporting the EUR/USD pair.
Nonetheless, uncertainties surrounding the European Central Bank (ECB) President Christine Lagarde’s leadership, along with fears of a trade conflict, could pose challenges for the euro. Notably, the European Parliament’s trade chief announced that the EU plans to halt the ratification process of a trade agreement with the US until more information on the Trump administration’s trade policy is provided.
In the currency markets today, the US Dollar showed varied performance against other major currencies. It was strongest against the Australian Dollar, while losing ground against others like the Euro and the British Pound. The accompanying heat map illustrates percentage changes among key currencies, with the base currency listed vertically and the quote currency horizontally. For example, the USD's movement against the Japanese Yen can be seen by locating the corresponding box where these two currencies intersect.