The euro takes rhythm against the US dollar. Although the European currency does not have a favorable environment to grow In the market, the euro reached new maximum of the year in the $ 1,054 area that involves moving more than 1.6% so far from 2025. The efforts of the leaders of the old continent for promoting military spending come together with the entry into force of the last US tariffs to China, Canada and Mexico that weaken, for now, to the Green ticket in front of the great currencies of the market.
Trump’s arrival at the White House is the main factor that alters to the currency market. The announced tariffs and diplomatic arts of the president of the United States lead the European Union to take special measures to increase defense expenditure. As an example, the president of the European Commission, Ursula von der Leyen, proposed to create a new instrument of loans of up to 800,000 million euros so that the member states finance their arms career.
This translates into a sudden impulse of the euro exceeding 0.5% and a new upward session after the second best day of the year, only surpassed by January 20. On this date, it was the investiture of Donald Trump and the day ended without the great tariffs promised by the Republican during the presidential campaign. That relieved al currency market and weakened the dollar. However, American obstacles to trade came later.
Although the efforts of the president of the United States revolve around a weak dollar, to date it has not achieved this goal. And meanwhile, the euro also looks at the domestic market. This Tuesday the common currency reached 1,0545 dollars intradicated to changewhich implies seeing the best cross for the common currency in front of the green ticket since December 10 of last year. And all this despite having three factors against today.
“The ECB will lower types this week in a context of economic weakness and lower inflationary pressures in the eurozone. In addition, there are US employment data and tariffs that will come into force on Tuesday against China, Canada and Mexico,” they said from Bankinter. And is that the market consensus that collects Bloomberg discounts that the monetary policy authority of the euro will cut Thursday the interest rates at 25 basic points. This will give a new pretext to the dollar to continue taking land to the second large currency of the market, since in the United States a monetary flexibility as fast as the one that presupposes the market for the euro zone is not expected.
Aberdeen’s economist (formerly Abrdn), Felix Feather, considers that Lagarde will not be dragged by this higher defense expense. “But the economic implications of a great boost to defense spending could be important and something that the ECB may not be able to ignore the medium term,” says the expert.
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