The EUR/USD pair attracted some buyers near 1.1370 during the early Asian session on Friday (4/18). Concerns over the economic impact of tariffs continued to drag the US Dollar (USD) lower against the Euro (EUR). Traders will be closely monitoring developments surrounding the US trade talks. Trading volumes are likely to be thin on Good Friday.

The European Central Bank (ECB) cut interest rates for the third time this year on Thursday, bringing its main rate to 2.25% in response to slowing growth and US President Donald Trump's tariffs. ECB President Christine Lagarde said during a press conference that US tariffs on EU goods, which have increased from an average of 3% to 13%, have hurt Europe's economic outlook. Analysts believe that a further rate cut in June is still very much on the cards and only a major easing in trade tensions would convince the ECB to hold off. "The policy tone is dovish. The focus has shifted to looking at downside risks to the growth outlook rather than upside risks to inflation," said Kirstine Kundby-Nielsen, FX strategist at Danske Bank. The ECB's dovish stance could weigh on the common currency in the near term.

Across the pond, Federal Reserve (Fed) Chairman Jerome Powell turned hawkish, saying that a weak economy and high inflation could run counter to the Fed's goals and allow for a stagflation scenario. His comments reduced the likelihood of a Fed rate cut in June, which boosted the US Dollar (USD) against the EUR. Currency traders had been pricing in nearly 86 bps of Fed rate cuts by the end of 2025, with the first cut expected in July, according to the CME FedWatch tool. (Newsmaker23)

Source: FXstreet