Euro Declines against US Dollar as EU Inflation Rises
The euro, the currency of 20 nations, weakened more than 1% to $1.024, nearing its lowest level since November 2022 amidst an inflation surge. U.S President Donald Trump late Sunday reiterated his threat to slap punitive tariffs on EU goods imported into the country.
Trump’s decision to impose 25% tariffs on Mexican and Canadian imports, along with a 10% levy on Chinese goods, weighed on market sentiment. He also threatened tariffs on the EU, citing the US trade deficit with Europe, which he called an “atrocity.” While Canada retaliated and Mexico may follow, the EU vowed to respond firmly to any US tariffs.
This uncertainty, combined with the European Central Bank’s dovish stance and the possibility of further rate cuts, added downward pressure on the euro.
Last week, the ECB lowered interest rates by 25 bps as expected. Meanwhile, the latest data showed the inflation rate in the Euro Area edged up to 2.5% in January, the highest since July 2024 and above market expectations of 2.4%.
Consumer prices in Euro area rose 2.5% compared with the same month of 2024, and up from the 2.4% of December, European Union statistics agency Eurostat said Monday.
European Central Bank policymakers have been anticipating easing inflation through 2025, allowing them to lower interest rates in an effort to spur the euro area’s struggling economy.
Economic growth was flat in the final quarter of last year, as its largest economy Germany contracted for a second year in a row. The ECB cut its key rate to 2.75% from 3% Thursday and signalled more cuts to come as inflation falls toward its target. Investors expect another cut at its next meeting in March. #Euro Declines against US Dollar as EU Inflation Rises BEDC Builds New 33kv Feeder Line to Improve Power Supply in Edo
