EUR/USD depreciates due to expected widening of interest rate gap between the United States and the Eurozone.
President Trump announced plans to impose a 25% tariff on all steel and aluminum imports without naming the affected countries.
German Chancellor Olaf Scholz warned that the European Union could respond "within an hour" if the US imposes the tariffs.
EUR/USD continues its losing streak for the third consecutive session, trading near 1.0310 during Asian trading hours on Monday. The pair remains under pressure as investors anticipate a widening interest rate gap between the United States (US) and the Eurozone.

The US Federal Reserve (Fed) is now expected to keep interest rates steady this year, following January's jobs report, which indicated slowing job growth but a lower Unemployment Rate. This development supports the US Dollar and weighs on the EUR/USD pair. Meanwhile, the European Central Bank (ECB) recently cut rates and signaled the possibility of further easing in March.

On Friday, data from the US Bureau of Labor Statistics (BLS) showed that Nonfarm Payrolls (NFP) increased by 143,000 in January, significantly below December's revised figure of 307,000 and the market expectation of 170,000. However, the Unemployment Rate declined slightly to 4% in January from 4.1% in December.
Speaking aboard Air Force One, US President Donald Trump announced plans to impose a 25% tariff on all steel and aluminum imports without specifying the affected countries. Trump also stated that additional reciprocal tariffs would be revealed by midweek, set to take effect almost immediately, matching the tariff rates imposed by each country, according to Reuters.

In response, German Chancellor Olaf Scholz stated on Sunday that the European Union (EU) could react "within an hour" if the US imposes the proposed tariffs. Separately, Bernd Lange, head of the European Parliament's trade committee, suggested that to avoid a trade war, the EU is open to reducing its 10% import tax on vehicles to a rate closer to the 2.5% tariff imposed by the US.

Concerns over potential deflationary pressures due to expected US tariffs have intensified odds of deeper ECB rate cuts, with markets now predicting the deposit rate could fall to 1.87% by December.(Cay) Newsmaker23

Source: Fxstreet