The euro extended its decline for a third consecutive session in European trading Wednesday, pressured by growing anxiety ahead of President Trump’s anticipated announcement of new reciprocal tariffs targeting EU exports. The single currency’s weakness reflects market concerns that the measures – expected to focus on critical sectors like automotive and industrial goods – could significantly disrupt eurozone trade flows and economic activity.
With EU exports to the U.S. representing nearly 15% of the bloc’s total external trade, traders are pricing in potential damage to key European industries. The tariffs threaten particularly sensitive sectors where EU manufacturers maintain substantial market share in American markets, including luxury vehicles and precision machinery. This comes as the eurozone economy already shows signs of fragility, with recent PMI data indicating slowing growth momentum.
Market technicians note the euro’s breakdown below key technical support levels suggests potential for further downside, especially if Trump’s announcement includes more aggressive measures than anticipated. The currency’s weakness against both the dollar and traditional safe-havens like the Swiss franc underscores how trade tensions are increasingly viewed as a euro-specific risk. Traders now await the tariff details for clues on whether the measures will prompt immediate ECB policy reassessments or coordinated EU countermeasures.
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