NEW YORK – The US dollar gained on Thursday after its recent weakness across peer currencies appeared exhausted for the time being, while the euro weakened slightly after the European Central Bank cut rates for the seventh time in a year.
The greenback has largely stabilized this week and held within a tight range against the single currency, following large drops last week that were prompted by concerns over the economic impact of tariffs and investors shifting investments overseas.
“We’ve had a pretty impressive run of strength for most of the G10 currencies and so I think we’re just in a bit of a pause phase right now,” said Eric Theoret, FX strategist at Scotiabank. “Our medium-term view’s still bearish for the US dollar, so we’re just seeing this as a bit of a consolidation.”
Traders are closely watching discussions between US President Donald Trump’s administration and trading partners for signs of a deal that may offer some clarity on the objectives of the Trump administration.
Trump on Thursday said he expects to make a trade deal with China, though he offered no specifics or indications of how talks would get underway with the two superpowers at an apparent impasse.
Trump and close ally Italian Prime Minister Giorgia Meloni expressed optimism about resolving trade tensions that have strained US-European relations, ahead of talks at the White House.
Trump also touted “big progress” in tariff talks with Japan on Wednesday.
The ECB cut interest rates to their lowest level since late 2022, looking to prop up an already struggling euro zone economy that will take a large hit from US tariffs.
“It has a dovish tone. Focus has shifted to looking at the downside risk to the growth outlook, rather than upside risk to inflation,” said Kirstine Kundby-Nielsen, FX analyst at Danske Bank.
