The euro rose in European trade on Tuesday, on track for the ninth daily profit in a row against the US dollar, and trading above $1.18 for the first time since 2021.
It comes amid concerns about the Federal Reserve’s independence and US financial stability after new attacks by Trump against Powell.
Recently, the odds of a European Central Bank’s interest rate cut in July tanked, with investors now awaiting eurozone inflation data later today.
The Price
The EUR/USD price rose 0.2% today to $1.1807, the highest since September 2021, with a session-low at $1.1774.
On Monday, the euro rose 0.5% against the dollar, the eighth daily profit in a row, marking the longest such streak of daily gains this year.
In June, the euro rose 3.9%, the sixth monthly profit in a row after massive German stimulus plans.
US Dollar
The dollar index fell 0.3% on Tuesday, sharpening losses for the seventh straight session and plumbing a three-year nadir at 96.61 against a basket of major rivals.
US President Donald Trump’s recent tax bill raised concerns about the financial stability of America, with ongoing uncertainty as well about US trade deals.
Investors are now betting on a faster pace of Fed rate cuts this year, while waiting for crucial US data this week, including the payrolls report on Friday.
Trump continued to pressure the Federal Reserve to cut interest rates, and sent Fed Chair Powell a list of interest rates by global central banks, saying that US rates should be between the 0.5% Japanese rate and the 1.75% Danish rate.
European Rates
ECB President Christine Lagarde hinted at the possible end of the current cycle of policy easing, which was in response to a combined shock such as the Covid 19 pandemic, the Ukrainian war, and the energy crisis.
According to a Reuters source, most ECB members now aim at holding interest rates unchanged in July, with the global markets now expecting just an additional 25 basis points of rate cuts by the end of the year.
The odds of a 0.25% ECB rate cut in July now stood below 30%, with traders awaiting more eurozone data and remarks by ECB officials to gather more clues.
European Inflation
Later today, eurozone inflation data is expected to show a 2% increase in June, up from 1.9% in May, while core prices are expected up 2.3%.
