The euro declined in European markets on Thursday against a basket of global currencies, extending its losses for the second consecutive day against the US dollar, moving away from its highest level in five months. This decline is the result of continued corrections and profit-taking, in addition to escalating trade tensions due to US President Donald Trump’s threats to impose new tariffs on the European Union.
The Trump administration’s tariffs on steel and aluminum, which amounted to approximately 25%, had already taken effect, directly impacting the European Union as one of the most affected by these tariffs.
In response to these tariffs, the European Union began preparing a plan to impose retaliatory tariffs on US goods worth up to €26 billion. This escalation in the trade war between the United States and the European Union has increased market anxiety, pushing the euro lower.
At the same time, these negative developments have affected overall market sentiment, increasing pressure on the European currency. The euro fell 0.1% against the US dollar to $1.0878, compared to the opening price of $1.0887. The euro had reached an intraday high of $1.0897 but was unable to maintain these gains. On Wednesday, the euro ended the session down 0.3% against the dollar, its first decline in four days, after reaching a five-month high of $1.0947.
Markets continue to closely monitor economic and trade developments, as any escalation in tensions between the United States and the European Union could lead to further volatility in currency markets and significantly impact the euro’s movements in the near future.
The euro fell against the dollar due to Trump’s threats to impose tariffs on the European Union.
Future expectations for the euro exchange rate vary based on a range of economic and political factors affecting global currency markets. Amid rising trade tensions between the United States and the European Union and changes in monetary policy, the euro is expected to face volatility in the near term.
A continued escalation in the trade war between the United States and the European Union could increase pressure on the euro, especially given the threat of additional tariffs by the United States. Such escalations could harm economic growth in the eurozone and increase concerns about the potential consequences for European companies.
On the other hand, the policies of the European Central Bank, particularly regarding interest rates and monetary easing, also affect the euro. If the ECB continues to adopt an accommodative monetary policy to support economic growth, this could lead to further pressure on the euro, as investors may prefer higher-yielding currencies such as the US dollar. Conversely, if the ECB decides to adjust its policy to combat high inflation or boost growth, this could contribute to strengthening the euro in the medium term.
In addition, economic performance in the eurozone should be monitored, including growth and inflation rates. Any improvement in these indicators could support the euro, while any deterioration in economic performance could pressure it. At the same time, the US dollar will remain a key factor in determining the euro’s movement, as US Federal Reserve decisions, particularly regarding interest rates and future economic growth prospects in the United States, will influence the euro’s exchange rate.
Moreover, political developments in the European Union will have a significant impact on the euro’s future. Political stability in EU countries will be a pivotal factor in strengthening confidence in the single currency.
These factors contribute to currency volatility.
Numerous global and domestic factors, including trade tensions, monetary policies, and economic performance in the eurozone, will continue to influence future expectations for the euro exchange rate. As a result, the euro is likely to remain volatile in the near term, with potential shifts in its direction driven by local and global economic and political developments.
Another influencing factor is the disparate economic performance in the eurozone compared to the United States. Although the US economy has experienced significant growth, the eurozone has been experiencing a slowdown in economic growth, negatively impacting confidence in the European currency. Inflation rates in the eurozone have also been below target levels, prompting investors to reduce their exposure to the euro.
In addition, several factors, most notably the strength of the US economy, support the US dollar, making it a very strong currency.
Ultimately, the euro’s decline against the US dollar is the result of a combination of external and internal factors, including the trade war, monetary policies, economic performance, and political conditions in the eurozone.
All of these factors contribute to currency volatility, leaving the euro vulnerable to pressure under current circumstances. The euro declined in the European market on Thursday against a basket of global currencies, continuing its losses for the second consecutive day against the US dollar, moving away from its highest level in five months.
This decline is the result of continued corrections and profit-taking, in addition to escalating trade tensions due to US President Donald Trump’s threats to impose new tariffs on the European Union. The Trump administration’s tariffs on steel and aluminum, which amounted to approximately 25%, had already taken effect, directly impacting the European Union as one of the most affected by these tariffs.
