Euro Dips as Trump's Tariff Threat Looms; US PCE Inflation Data Awaited Amidst Global Market Jitters

The euro experienced a slight dip, trading down 0.22% to $1.0778, as markets reacted to the impending threat of reciprocal tariffs from US President Donald Trump, scheduled for announcement on April 2. Concerns surrounding these tariffs, particularly the 25% levy on imported autos, have sparked fears of economic slowdown and inflationary pressures globally. Data revealed that inflation in France and Spain grew at a moderate pace in March, below analysts' expectations, leading traders to increase bets on European Central Bank (ECB) rate cuts. Separately, French consumer spending declined, and Germany's unemployment rate increased. Investors are also awaiting the US Personal Consumption Expenditures (PCE) Price Index data, the Federal Reserve's preferred inflation indicator, with expectations of a 2.7% year-on-year increase in February. Federal Reserve officials have expressed concerns over a resurgence in price pressures in the near term due to Trump's tariff agenda. The dollar index rose 0.13% to 104.38, but is on track for its biggest monthly decline since November 2023.