The dollar fell against the euro and pound as US policies continued to impact markets, while the European Central Bank (ECB) cut rates and the UK received an inflation boost.
Market Recap:
The euro continued its upswing against the dollar this week, hitting its highest level since 2021. The euro has climbed more than 5% against the greenback in April.
Uncertainty over President Trump’s tariff policy (will he, won’t he?) continues to weigh on the US currency. Adding to the confusion are fears over the independence of the Federal Reserve (Fed), after Trump attacked Chairman Jerome Powell and openly pondered the option of firing him.
The ECB cut its main rate by 25 basis points (bps) last week in an attempt to boost eurozone growth. Markets now expect three more 25bps cuts by the end of the year.
The pound also rallied against the dollar, hitting its highest levels for seven months. New figures showed UK inflation falling more than expected, with traders now pricing in 86bps of rate cuts in the remainder of 2025.
More volatility might be expected this week, with figures due on balance of trade and construction output in the EU, and business optimism in the UK.
