EUR/USD Hits Four-Year High Amid Trump’s Criticism of Powell and Disappointing US Economic Data
The euro extended its winning streak against the US dollar for the sixth consecutive session on Thursday, pushing the EUR/USD currency pair to its highest level since September 2021. The pair climbed past the 1.1700 mark during American trading hours, marking a nearly four-year peak as robust demand for the euro combined with sharp weakness in the US dollar.
Trump’s Renewed Criticism of Fed Chair Jerome Powell Adds to Dollar Weakness
A significant factor behind the US dollar’s decline was renewed criticism from former President Donald Trump targeting Federal Reserve Chair Jerome Powell. Speaking at a press conference after the NATO Summit in The Hague, Trump labeled Powell as “terrible,” accused him of political motivations, and reiterated calls for immediate interest rate cuts. Trump also revealed he was considering “three or four” candidates who could replace Powell, whose term is set to expire in May 2026. This intense scrutiny and political pressure on the Fed have raised concerns about potential interference in US monetary policy, thereby undermining confidence in the Fed’s independence and putting downward pressure on the greenback.
ECB Signals Cautious Optimism with Data-Dependent Approach
In Europe, European Central Bank (ECB) Vice President Luis de Guindos signaled a cautious, data-driven approach to monetary policy. Speaking at the Deutsche Bank Forum, de Guindos emphasized that upcoming policy decisions will depend heavily on evolving trade conditions, energy prices, exchange rates, and financial stability. He also highlighted growing risks from global trade tensions and geopolitical developments that could impact the Eurozone’s inflation and growth outlook. The comments imply that the ECB remains open to the possibility of additional rate cuts should economic conditions require such measures.
US Economy Shows Signs of Strain with Revised GDP Data and Mixed Indicators
Economic data released on Thursday painted a mixed but concerning picture for the US economy. The US GDP for the first quarter of 2025 was revised downward to a contraction of 0.5% annualized, worse than the previously estimated 0.2% decline. This marks the first quarterly contraction in three years and was attributed mainly to a slowdown in consumer spending and a sharp reduction in exports.
Meanwhile, weekly initial jobless claims fell by 9,000 to 236,000, slightly below expectations, yet claims remain elevated relative to the yearly average, indicating subdued labor market momentum. Additionally, durable goods orders for May surprised with a strong 16.4% increase, signaling resilience in manufacturing; however, this alone has not offset broader concerns from the weak GDP report and ongoing labor market softness.
Market Outlook: Awaiting Fed’s Core PCE Inflation Data
The contrasting economic signals have complicated the outlook for US monetary policy, especially amid the growing political pressure on the Fed. Market participants are now turning their attention to Friday’s scheduled release of the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index, for clearer guidance on future interest rate decisions.
Until more clarity emerges, the EUR/USD is expected to remain supported by ongoing US dollar weakness, continuing the euro’s advance. Euro strength was also reflected broadly against other major currencies, as shown in recent percentage changes, with the euro leading gains against the US dollar.
Disclaimer: The information contained in this article is for informational purposes only and does not constitute investment advice. Market conditions can change rapidly, and investing in currency markets involves significant risk of loss. Readers should conduct their own research or consult with a financial advisor before making any investment decisions.