The euro rose in European trade on Monday against a basket of major rivals, expanding the gains against the dollar for the second straight session and hitting a four-year peak as it trades above the psychological barrier of $1.15 for the first time since late 2021.
It comes amid a growing loss of confidence in the dollar due to US President Donald Trump’s plans to restructure the Federal Reserve, which could impact its independence.
The Price
The EUR/USD price rose 1.25% today to $1.1533, the highest since November 2021, with a session-low at $1.1391.
The euro rose 0.25% on Friday against the greenback, the second profit in three days on thin holiday trading.
The pair rose 0.3% last week, the fourth weekly profit in a row on hopes for reaching a US-EU trade deal soon.
US Dollar
The dollar index fell 1.1% today to three-year lows at 98.25 against a basket of major rivals.
It comes as investors confidence deteriorates once more in the US economy due to perceived US government interference in the Federal Reserve.
The White House said it’s considering ways to fire Fed Chair Jerome Powell after Trump expressed urgent desires to terminate him due to disagreements about monetary policies.
Such news continues to rattle the markets, which depend heavily on the independence of the Federal Reserve from any political interference as a pivotal mainstay in the global financial system.
The ECB
The European Central Bank cut interest rates by 25 basis points to 2.25% as expected by most analysts today.
It’s the seventh consecutive rate cut as the ECB attempts to boost the struggling eurozone economy amid a trade war with the US.
ECB President Christine 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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