European Inflation Data Sends Euro Sliding Amidst US Tariff Uncertainty

The euro fell after European inflation data underperformed expectations, while stronger U.S. dollar rose due to looming U.S. tariff deadlines. Analysts observed that cooler inflation in France and Spain and rising unemployment in Germany pressured the euro, as markets braced for Trump's reciprocal tariff announcements sparking global investor caution.

The euro slipped on Friday following lower-than-expected European inflation data, while investors also focused on an impending U.S. tariff deadline. France and Spain's milder inflation and Germany's rising unemployment fueled speculations of more ECB rate cuts. Meanwhile, the dollar gained ground as the U.S. awaited its own inflation figures.

The euro, despite dropping 0.28% to $1.0772, has risen 3.8% this month following Germany's recent defense spending plans and dollar limitations due to U.S. growth concerns. All eyes were on April 2, when President Trump promises new tariffs on major trade partners, adding further uncertainty to global markets.

According to Mohit Kumar of Jefferies, market activity is driven by Trump's tariff decisions, which may lead to negotiations reducing their potential negative impact. As global investors brace for these tariff announcements, increased risk aversion was noted, particularly affecting the U.S. dollar index and other currency movements.

(With inputs from agencies.)