Euro Slides On Trump's Tariff Threats

(RTTNews) - The euro weakened against other major currencies in the European session on Wednesday amid fears of fresh tariffs by the U.S. President Donald Trump spoke about the possibility of a 25% levy on imports of automobile, semiconductors and pharma products from April, weigh on sentiment.

Trump, continuing with his aggressive stance on trade, reiterated that U.S. will charge reciprocal tariff to trading partners which would be 'no more, no less' levied by other countries.

World markets renewed the focus on monetary policy ahead of the release of the minutes of the latest Federal Open Markets Committee.

In economic news, data from the European Central Bank showed that the euro area current account surplus increased to a six-month high in December. The current account balance showed a surplus of EUR 38 billion in December compared to a surplus of EUR 25 billion in November. This was the highest surplus since June.

The surplus on goods trade fell to EUR 33 billion from EUR 35 billion. Meanwhile, the surplus on services increased to EUR 18 billion from EUR 11 billion.

In an interview with the Financial Times (FT), ECB executive board member Isabel Schnabel stated that, in contrast to market expectations, she anticipates the central bank will declare a "halt" in the monetary expansion cycle because inflation risks have "skewed to the upside" and borrowing costs have significantly decreased. Schnabel cautioned that despite "new shocks to energy prices," wage growth was "still elevated" and domestic inflation was "still high."

In the European trading today, the euro fell to a 6-day low of 1.0424 against the U.S. dollar, a 1-week low of 158.12 against the yen and more than a 1-1/2-month low of 0.8273 against the pound, from early highs of 1.0462, 159.13 and 0.8289, respectively. If the euro extends its downtrend, it is likely to find support around 1.02 against the greenback, 155.00 against the yen and 0.80 against the pound.

The euro edged down to 0.9432 against the Swiss franc, from an early 5-day high of 0.9445. On the downside, 0.93 is seen as the next support level for the euro.

Moving away from an early 5-day high of 1.8395 against the NZ dollar, the euro slid to a 9-day low of 1.8216. The euro may test support near the 1.79 region.

Against the Australia and the Canadian dollars, the euro slipped to an 8-day low of 1.6402 and a 6-day low of 1.4802 from early highs of 1.6465 and 1.4833, respectively. The kiwi is likely to find support near 1.62 against the aussie and 1.47 against the loonie.

Looking ahead, U.S. MBA mortgage approvals data, U.S. building permits and housing starts, both for January and U.S. Redbook report are slated for release in the New York session.

At 2:00 pm ET, the Federal Open Market Committee (FOMC) meeting minutes of its latest monetary policy meeting held on January 28-29, 2025, where the interest rates were kept unchanged at 4.25 percent to 4.5 percent.