The EUR/USD pair strengthened to approach 1.1415 in early European trading on Monday, as the euro edged higher against the US dollar following US President Donald Trump’s decision to extend the deadline for 50% tariffs on the European Union (EU) until July 9. Market attention now turns to speeches from European Central Bank (ECB) President Christine Lagarde and German Bundesbank President Joachim Nagel later in the day.
Trump announced on Sunday that, after a phone conversation with European Commission President Ursula von der Leyen, he agreed to delay the implementation of the 50% tariff deadline on the EU. This move offers near-term support to the euro. Earlier in April, Trump imposed 20% tariffs on the EU under his broad “reciprocal tariffs” policy, which were subsequently reduced to 10% for a 90-day period.
Meanwhile, ECB Governing Council member Yannis Stournaras signaled that the central bank might keep borrowing costs steady following a likely quarter-point rate cut next month. Stournaras emphasized that the ECB will continue to adopt a cautious, meeting-by-meeting, data-driven policy approach.
Despite these developments, ongoing US trade tariffs and related uncertainties may continue to weigh on the euro. According to Reuters, markets have priced in nearly a 90% chance of an ECB rate cut on June 5, but only one further reduction for the remainder of the year.
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