The Euro advanced against the US Dollar amidst muted trading, with financial markets closed for Good Friday. EUR/USD rose to 1.1385, a 0.21% increase, though still short of breaching 1.14.
U.S. trade policies, particularly tariffs on Chinese ships, led to a depreciation of the U.S. Dollar as traders sought alternative currencies. Meanwhile, President Trump’s dissatisfaction with Fed Chair Jerome Powell remains a developing story.
Energy Prices And Tariffs
ECB’s Madis Müller noted that energy price declines and tariffs supported rate cuts, though fragmentation’s potential to boost inflation remains a concern. Despite light news, EUR/USD is nearing its weekly high, aiming to surpass resistance levels set earlier in the year.
Globally, the Euro is the second most traded currency, accounting for 31% of all foreign exchange transactions in 2022, with a daily turnover exceeding $2.2 trillion. The European Central Bank, based in Frankfurt, oversees monetary policy and aims for price stability by adjusting interest rates.
Economic indicators such as GDP, PMIs, employment, and consumer sentiment significantly influence the Euro’s value. The Trade Balance also impacts the currency, with a surplus enhancing its strength.
For those tracking short-dated options or maintaining leveraged positions, it’s worth reflecting on the context in which EUR/USD is managing a modest push upwards. Last Friday’s trading session was subdued due to closed markets for the Easter holiday, often a period where volume collapses and price movements are easily distorted. Despite this, the Euro moved higher, a 0.21% lift bringing it to 1.1385, although it stalled shy of the 1.14 barrier. Importantly, this resistance has been an ongoing area of interest, with previous advances fading at similar levels since January.
Impact Of Trade Measures
The movement largely stemmed from weakening sentiment toward the US Dollar. This came in response to active trade measures out of Washington—specifically, new tariffs targeting Chinese shipping assets. It’s a rare lever to pull and one that added stress to the Greenback, which tends to come under pressure when risk sentiment tilts or when fiscal policy adds friction. In forex markets, people react quickly to potential bottlenecks in trade—especially from the world’s largest economy. What we’re seeing is a classic preference for safety, which in this setting seemed to favour the Euro, despite no new data points to fuel its ascent directly.
Comments from Müller, one of the more cautionary voices at the European Central Bank, were not headline-grabbing but held value for anyone keeping an eye on rate expectations. He suggested that falling energy prices as well as the side-effects of US tariffs make the case for lowering rates easier. However, his caveat about ‘fragmentation’ speaks directly to the risk of inflation becoming more uneven across the Euro Area—a factor that would limit the ECB’s ability to cut uniformly. That has direct implications on duration trades and forward guidance assumptions. For traders, this effectively raises the probability that market expectations around rate reductions may need to soften, particularly if divergence across the bloc sharpens.
We’ve also had a look back at flows and liquidity patterns. Putting things in perspective, the Euro remains a core part of global trade mechanics, second only to the Dollar in scope. Based on BIS data from 2022, about 31% of daily foreign exchange turnover involved the Euro—amounting to over $2.2 trillion every day. That’s not just trivia; it tells us that any policy shifts from Frankfurt carry weight, even when headline numbers are quiet. Forward vols tend to underprice these periods, which could give directional traders a better setup moving into the next cycle of PMIs and inflation reads.
Most of the Euro’s strength—structurally speaking—tends to emerge during moments of fiscal surplus or improving external balances. When exports strengthen and imports drop off, the currency gains a form of natural support. The Trade Balance data remains a vital watch; recent readings show enough stability to keep Euro bulls comfortable, but any swing brought on by Chinese re-routing or retaliations to US tariffs could tip things. This matters especially for those using cross-pair hedging or adjusting carry exposures.
From our side, economic signals like GDP growth, employment shifts, and consumer sentiment surveys retain their usual weight when forecasting short-term currency risk. This remains a week-to-week adjustment zone. However, what’s unfolding in rate policy discussions—and trust in policymakers—is likely to exert more medium-term sway than usual. Depending on the follow-through post-holiday, momentum traders will need to assess whether EUR/USD’s recent lift has deeper backing or whether it’s merely the product of illiquid trading conditions emboldening otherwise minor flows.
What matters from here is pricing in this week’s events cleanly. Breaks above established upper bounds, like the 1.14 level, need confirmation through consistent closes and supporting economic metrics. Watch for any shifts around US data—particularly inflation forecasts and Fed commentary—which could either retrace current moves or reinforce them. For now, it’s a moment for patience, but also for readiness.
