Euro on track for biggest monthly profit since 2022

The euro fell in European trade on Wednesday against a basket of major rivals, expanding the losses for the second straight session against the US dollar as concerns about a US recession faded with trade talks between Washington and its trade partners progressing. 

Despite the decline, the euro is still heading for the biggest monthly profit since 2022 due to a massive German stimulus plan, while Trump paused his aggressive tariffs on EU goods for 90 days.

Later today, important German inflation data will be released for April, which will provide important clues on the pace of inflationary pressures on European Central Bank policymakers.

The Price

The EUR/USD price fell 0.3% today to $1.1354, with a session-high at $1.1395.

The euro fell 0.3% on Tuesday, the second loss in three days as global trade negotiations progressed.

Monthly Trades

The euro is up 5% so far this month against the dollar, on track for the third monthly profit in a row, and the largest since November 2022.

This biggest monthly profit in three years comes after Germany announced a massive new stimulus plan, while the US paused its tariffs on the EU and engaged in negotiations.

Trade Developments

US Treasury Secretary Scott Bessent said on Tuesday the administration is achieving a lot of progress in tariff negotiations, pointing to upcoming deals with India and South Korea, with talks ongoing with at least 17 trade partners. 

US Trade Secretary Howard Lutnick said the Trump administration already made a trade deal, with final approval awaiting in Japan before announcement. 

US President Trump also signed two executive orders to reduce the impact of auto tariffs through rebates and other measures.

European Rates

Sources reported that some ECB officials see a high chance of a rate cut in June.

President of the Deutsche Bundesbank Joachim Nagel said that German recession this year can’t be ruled out.

European Central Bank President Christine Lagarde said the impact of tariffs could be seen on the PMI and unemployment numbers.

Lagarde expects the tariffs to have more of a deflationary role on prices rather than inflationary. 

Markets are currently pricing in a 60% chance of an ECB interest rate cut in June. 

Now traders await important German inflation data today, and eurozone inflation data tomorrow to gauge the likelihood of an ECB rat cut in May.