NEW YORK- The dollar edged up against the euro on Friday, on pace for its first weekly gain this month, as investors booked profits from the euro’s recent advance ahead of the April 2 deadline for reciprocal US tariffs.
The euro was 0.3 percent lower at $1.08223, on pace to finish the week down 0.6 percent, its first weekly loss since February 28.
The dollar, under pressure this year from worries over the hit to US economic growth from the Trump administration’s trade policies, found some respite this week as the Federal Reserve indicated it was in no rush to cut interest rates.
The euro softened as investors booked gains, even as Germany’s Bundesrat, the upper house of parliament, passed a reform of the country’s borrowing rules and a 500-billion-euro fund to revamp its infrastructure and revive Europe’s largest economy.
“It’s really been a huge rally in EUR/USD this quarter … so, naturally, we’re seeing some profit-taking ahead of the April 2 tariff deadline,” said George Vessey, lead FX and macro strategist at Convera.
“Given the lack of reaction to the German Bundestag’s approval of the debt break constitutional change this week, perhaps we’re near peak optimism regarding the fiscal tailwind,” he added.
This week the Fed, Bank of England and Bank of Japan left interest rates unchanged as they assessed the economic impact of US President Donald Trump’s trade tariffs against global trading partners.
Fed policymakers signaled two quarter-point cuts later this year, the same median forecast as three months ago.
“We’re not going to be in any hurry to move,” Fed Chair Jerome Powell said, underscoring the challenge policymakers face in navigating Trump’s tariffs policy, and the potential impact on the domestic economy.
