The euro fell in European trade on Wednesday against a basket of major rivals, extending losses for the second straight session against the dollar and hitting a week trough, moving away from four-year highs on profit-taking.
Pressure on the dollar and US assets receded after President Trump’s assurances to the markets that he won’t fire Fed Chair Jerome Powell.
Now investors await important eurozone data later today, which would provide clues on the pace of growth in the second quarter, and the likely pace ahead of eurozone interest rate cuts.
The Price
The EUR/USD price fell 1% to $1.1307, the lowest in a week, with a session-high at $1.1425.
The pair closed down 0.8% on Tuesday, marking the first loss in three days on profit-taking away from a four-year high at $1.1573.
US Assets
US assets rebounded strongly on Tuesday with stock indices rallying and the dollar index rebounding from three-year lows after assurances from President Trump.
Trump’s Reassurances
US President Donald Trump assured the markets he doesn’t intend to fire Fed Chair Jerome Powell despite his disappointment from the slow pace of policy easing.
Trump told reporters in the White House that he never tried to fire him, but he would like to see him more active about interest rate cuts.
It comes after a series of heavy Trump attacks against Powell on social media, calling him a big loser and asserting his authority to fire him.
Potential Trade Deals
Markets were boosted as investors bet the US will reach trade deals with China and other trade partners in the near future.
US Treasury Secretary Bessent said he expects a de-escalation in the trade war with China in the very near future, calling the current confrontation “unsustainable”.
Lagarde
ECB President Christine Lagarde is scheduled to speak to CNBC later today and discuss the latest developments in the eurozone and the US tariff crisis.
Last week, Lagarde said that tariffs represent a shock, but their impact on inflation remains unclear.
She said the picture might not become clear by the next policy meeting in June, as the 90-day pause on tariffs would still be in place by then.
European Rates
Reports showed that some ECB officials see a high probability of a rate cut in June.
Markets are pricing in a 60% chance of an ECB rate cut in June.
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