- EUR/USD strengthens ahead of Thursday’s release of the preliminary Eurozone Q1 2025 GDP report.
- The Euro is buoyed by growing confidence in its status as a global reserve currency.
- The US Dollar faces headwinds as market sentiment remains cautious amid ongoing, though slightly reduced, trade uncertainties.
EUR/USD remains firm around 1.1200 during Thursday’s Asian session, recovering daily losses as the Euro (EUR) gains traction ahead of the preliminary Eurozone Gross Domestic Product (GDP) report for Q1 2025, due later in the day.
The Euro’s strength is underpinned by rising confidence in its role as a reserve currency. Analysts at Capital Economics noted that the single currency is currently enjoying its strongest position in years to close the gap with the US Dollar (USD) in global reserves. This shift is partly attributed to US President Donald Trump’s policies, which are seen as eroding the Greenback’s traditional safe-haven appeal. Further boosting the Euro’s reserve status, Germany’s move to loosen fiscal constraints to increase defense and public spending has spurred additional demand for the currency.
Meanwhile, European Central Bank (ECB) officials continue to emphasize the need for further interest rate cuts, amid growing confidence that US tariff measures will not significantly raise inflation in the Eurozone. Although lower interest rates typically weigh on the Euro, the currency remains resilient for now.
The EUR/USD pair is also finding support from a softer US Dollar, as markets remain cautious amid persistent—albeit slightly eased—trade uncertainties. Attention now turns to upcoming US data releases, including Retail Sales and the Producer Price Index (PPI).
Adding to the broader context, speculation is growing that Washington may favor a weaker dollar to enhance its trade competitiveness. The Trump administration has argued that an overvalued Greenback puts US exporters at a disadvantage compared to peers with weaker currencies.
Economic Indicator
Gross Domestic Product s.a. (YoY)
The Gross Domestic Product (GDP), released by the Eurostat on a quarterly basis, is a measure of the total value of all goods and services produced in the Eurozone during a certain period of time. The GDP and its main aggregates are among the most significant indicators of the state of any economy. The YoY reading compares economic activity in the reference quarter compared with the same quarter a year earlier. Generally speaking, a rise in this indicator is bullish for the Euro (EUR), while a low reading is seen as bearish.
Read more.Next release: Thu May 15, 2025 09:00 (Prel)
Frequency: Quarterly
Consensus: 1.2%
Previous: 1.2%
Source: Eurostat
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