Euro Holds Narrow Range Following Trade Updates

The euro held around the $1.165 mark on Thursday, remaining in a narrow range since the start of the week and holding most of its rally this year as markets assessed fresh data and new developments on trade with the US. New PMI data showed that Eurozone economic activity rose the most in 15 months amid higher new orders and price gauges, strengthening the case for less rate cuts by the ECB, with ESTR futures pointing to abroad consensus of one 25bps rate cut this year.

In the meantime, new insights on the trade deal between the EU and the US showed that most European goods will be subject to 15% levies, although autos, pharmaceutical goods, and chips may not be subject to higher sector tariffs threatened by the US. The euro rallied 11% against the dollar this year as EU nations signaled they will increase expenditure to stimulate industry, infrastructure, and defense, while uncertain economic policy and fiscal stress in the US triggered a flight away from the dollar.