EUR traded mixed against other major currencies in the European session on Monday, as investors weighed the latest developments on the tariff front while awaiting the outcomes of the European Central Bank’s policy meeting later this week.
The single European currency firmed versus USD, CHF, CAD, weakened versus AUD, GBP and SEK, and changed little versus JPY.
White House announced late Friday that a range of products, like smartphones, semiconductors, and some other electronics, are exempted from the 10% global tariff and the 125% China tariff, but not the 20% duty, imposed on Beijing due to the fentanyl trade. The U.S. Commerce Secretary Howard Lutnick stated that those products will be subject to separate tariffs in "a month or two." Meanwhile, U.S. President Donald Trump pledged to announce a tariff rate for semiconductors soon.
The ECB is widely anticipated to cut its key interest rates by another 25 basis points at its April 16-17 meeting as mounting global trade tensions and the strengthening of the euro weigh on the euro area’s outlooks.
After the ECB’s March meeting, a pause in its policy easing had seemed appropriate given the improved eurozone growth projections and supportive fiscal shifts in Germany. However, the recent spike in global economic uncertainties, incited by the U.S. tariff actions, and expected additional disinflationary pressures from the euro’s appreciation and a decline in energy prices have reignited near-term growth concerns for the region. Thus, in markets’ view, the ECB is compelled to decrease its interest rates again this week. Attention will also be paid to the ECB’s notion of tariff-related risks and its assessment of policy restrictiveness.