01/04/25

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The EUR/USD pair is currently trading around the 1.0830 level, reflecting a phase of uncertainty among investors. The volatility is largely due to anticipation surrounding President Trump’s upcoming announcement of reciprocal tariff measures, scheduled for Wednesday. The US Dollar is experiencing a downward trend, having declined for three consecutive days, and the US Dollar Index recently reached a ten-day low of approximately 103.75.

Market analysts predict that Trump’s tariff policy may have detrimental effects on economic growth and could exacerbate inflation not just in the United States, but globally. Reports suggest Trump is urging his advisers to adopt stricter trade measures, including the possibility of a universal tariff that would apply broadly to imports, irrespective of their country of origin. This follows expressions of regret from Trump about not implementing broader tariffs during his previous term.

Investors are also looking ahead to several important economic data releases this week that could influence the Federal Reserve’s monetary policy stance. Key indicators will include the ISM Manufacturing and Services Purchasing Managers Index, along with various labor market statistics. Current projections suggest the Fed will maintain its interest rates through May, though expectations for a potential rate cut in June have notably risen.

Additionally, preliminary data on German Harmonized Index of Consumer Prices is set to be released, with estimates indicating a year-over-year increase of 2.4% for March, slightly down from February’s 2.6%. Meanwhile, previous inflation reports from France and Spain indicated that price increases were softer than anticipated, and this trend may filter into market expectations regarding the European Central Bank’s policy decisions.

Investors remain cautious, particularly with Trump’s implications of imposing significant tariffs on the Eurozone, which could hinder economic growth in that region. The European Central Bank has acknowledged the risks associated with a renewed trade conflict, suggesting it could lead to a slowdown in growth. As the week progresses, traders will be closely monitoring developments on tariffs and economic indicators to gauge the potential impact on both the Euro and the Dollar.