Super Euro: EU Currency Hits 4-Month High as Dollar Drops.
The euro gained ground after Germany proposed a €500 billion infrastructure fund, boosting growth expectations for the “Old Continent.”
On Wednesday, the euro reached a four-month high against the dollar, driven by the 500 billion euro ($531 billion) proposal from Germany, which bolstered Europe’s growth outlook and could offset global trade tensions.
The euro climbed 1.5% to $1.0791, its biggest daily gain since November 2023, reaching its highest point since November 8. It also strengthened against other currencies like the British pound, Japanese yen, and Swiss franc, heading toward its best week since November 2022.
Meanwhile, the dollar weakened against most currencies, impacted by an uncertain growth outlook amid concerns over tariffs’ effect on inflation and the economy. The dollar index, which tracks the U.S. currency against a basket of six peers, fell 1.2% to 104.29, its lowest since November 8.
Recession Concerns Rise in the U.S. Amid Tariff Hikes
Investors are beginning to price in the possibility of a full recession in the U.S., with Kalshi market prediction traders estimating a 42% chance of a recession in the world’s largest economy this year. Signs of economic slowdown, partly driven by tariff uncertainties, have hurt the dollar. U.S. President Donald Trump reiterated plans for reciprocal tariffs starting in April during his first Congressional address since taking office.
The 25% tariffs on imports from Mexico and Canada took effect Tuesday, along with a doubling of tariffs on Chinese products to 20%. Canada and China quickly responded, while Mexican President Claudia Sheinbaum promised retaliation without further details.
Meanwhile, Trump announced a one-month exemption for car manufacturers from the 25% tariffs on Canada and Mexico, provided they comply with terms of an existing regional trade agreement, according to the White House.
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