- EUR/USD rallies to approximately 1.1330 as the USD Index encounters resistance in its attempts to surpass the critical threshold of 100.00.
- The US Dollar is under pressure, influenced by a concerning US economic forecast amidst President Trump’s tariff strategies.
- European Central Bank (ECB) policymakers have expressed concerns that the risks to inflation are predominantly skewed towards the downside.
EUR/USD is trading steadily around 1.1330 during North American trading hours on Thursday. The primary currency pair is recouping earlier losses, having dipped to approximately 1.1285, as the US Dollar Index (DXY), which measures the Greenback’s performance against a basket of six major currencies, relinquishes some of its initial gains after failing to maintain its two-day upward trajectory above the key psychological level of 100.00. Market participants are closely monitoring these movements as indicators of potential shifts in currency valuations.
The prognosis for the US Dollar (USD) appears increasingly challenging, primarily due to the unexpected contraction in the United States (US) Q1 Gross Domestic Product (GDP), coupled with decelerating job creation and ongoing uncertainties surrounding US-China trade relations. These factors are collectively contributing to a more cautious outlook for the dollar’s near-term performance. Furthermore, recent comments from Federal Reserve officials suggest a more dovish stance on monetary policy, adding further complexity to the dollar’s trajectory.
Economic data released on Wednesday revealed that the US economy experienced a decline of 0.3% on an annualized basis. This downturn was largely attributed to companies accelerating import orders from their international suppliers to preemptively avoid the imposition of higher tariffs, which were announced by US President Donald Trump on what was termed “Liberation Day”. This marks the first instance in three years that the US economy has encountered a contraction within a quarterly period, raising concerns about the sustainability of economic growth and prompting analysts to reassess their forecasts for the remainder of the year. The contraction has led to increased speculation about potential interventions from the Federal Reserve to stimulate economic activity.
