EUR/USD halted a three-day losing streak, trading around 1.0840 during Asian hours on Monday (3/24). The pair strengthened as concerns over a US economic slowdown, fueled by President Donald Trump's trade policies, weighed on the US Dollar (USD). Investors now focus on the preliminary March Purchasing Managers' Index (PMI) data for the Eurozone, Germany, and the United States (US), due later in the day.
The EUR/USD pair also benefited from improved risk sentiment as the White House revised its tariff strategy ahead of its implementation on April 2. According to the Wall Street Journal, the administration is expected to roll back some industry-specific tariffs while imposing reciprocal tariffs on countries with strong trade ties with the US.
In addition, geopolitical tensions eased following talks between Ukrainian and US officials in Riyadh on Sunday. Efforts to broker a ceasefire continue, with President Trump advocating an end to the three-year war. Ukrainian Defense Minister Rustem Umerov discussed measures to protect energy and critical infrastructure, while U.S. and Russian delegations will hold separate talks on Monday, according to Bloomberg.
The euro (EUR), however, faces challenges amid concerns that Trump's tit-for-tat tariffs could significantly hamper eurozone economic growth. Last week, European Central Bank (ECB) President Christine Lagarde warned of downside risks stemming from Trump-led trade disputes while downplaying concerns about persistently high eurozone inflation.
Adding to the uncertainty, ECB Vice President Luis de Guindos told The Sunday Times that President Trump's policies are creating more economic instability than during the COVID-19 crisis. Similarly, Jose Luis Escriva said on Bloomberg TV on Friday that inflation and economic growth outlooks face significant risks in both directions, making future interest rate decisions highly unpredictable.
Germany, one of the U.S.'s top trading partners, is expected to bear the brunt of Trump's tit-for-tat tariffs. While the US currently imposes a 2.5% tariff on German car imports compared to a 10% tariff in the Eurozone, Trump has threatened to impose a 25% tariff on foreign cars. Germany's lower house of parliament, the Bundestag, has approved measures to expand borrowing limits, injecting billions of euros into the economy, which could cushion the potential impact of US tariffs. (Newsmaker23)
Source: Fxstreet
