By Frank Walbaum, Market Analyst, Naga
The euro gained ground against the US Dollar on Monday, benefiting from renewed pressure on the greenback following President Trump’s announcement of a 50% tariff hike on steel and aluminum imports. However, the single currency faced headwinds against the yen and the British pound, highlighting that its strength was largely driven by dollar-specific factors rather than broad-based euro optimism.
Attention now shifts to a pivotal week for the eurozone, with the European Central Bank widely expected to deliver another rate cut at Thursday’s meeting. Markets anticipate a 25 basis point reduction, as subdued inflation leaves room for a softer monetary policy and rising external risks continue to weigh on the bloc’s outlook. The ECB’s easing stance diverges from the Federal Reserve’s more cautious posture, a contrast that could keep the euro under pressure.
Looking ahead, Tuesday’s flash inflation data will serve as a key input for Thursday’s decision and forward guidance. A further softening in prices would reinforce the case for additional moderation, weighing on the euro.