The euro rose against the dollar in early Wednesday trading, building on the momentum gathered at the start of the week and reaching its highest level of the year. The dollar has been weakening across the board, with the index tracking its performance against a basket of major currencies down more than 4% since early February. Traders have shifted from pricing in growth and inflationary pressures from Trump’s tariffs to anticipating a slowdown in the US economy as the country moves towards protectionism. Meanwhile, the euro has benefited from growing consensus within Europe on increasing spending in defence and infrastructure, supported by plans to relax budget deficit constraints and create a common fund – a dynamic likely to stimulate growth and drive inflation higher. Nevertheless, some dark clouds linger on the horizon for the single currency. If confirmed, US tariffs would threaten eurozone economic prospects and act as a headwind for the euro.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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