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• EUR/USD loses ground to near 1.1680 in Friday’s Asian session. 
• Trump said the EU would receive a letter notifying them of new tariff rates ‘today or tomorrow.’
• ECB’s Holzmann said the central bank doesn’t need to reduce rates any further.

The EUR/USD pair extends the decline to around 1.1680 during the Asian trading hours on Friday. The Euro (EUR) faces some selling pressure against the Greenback after US President Donald Trump announced a new tariffs policy, adding to the uncertainty around his evolving trade policy. The European Central Bank (ECB) policymakers Fabio Panetta and Piero Cipolloe are set to speak later on Friday. 

This week, Trump has sent letters to more than 20 countries establishing tariff rates, including 50% tariffs on imports from Brazil and a 35% duties rate for goods imported from Canada. He also imposed a 50% tariff on copper imports that is scheduled to take effect on August 1. Trump added that the members of the European Union (EU) would get letters notifying them of new tariff rates “today or tomorrow.”

Traders will closely monitor the developments surrounding the US-EU tariff policy as the bloc is the largest trading partner of the US. Any signs of renewed trade tensions or tariff uncertainty could undermine the shared currency in the near term. 

The ECB is likely to remain cautious about reducing interest rates, which might help limit the EUR’s losses. ECB’s Governing Council member Robert Holzmann said on Wednesday that the central bank doesn’t need to continue easing policy as borrowing costs may already be providing stimulus to the economy. 

Meanwhile, ECB policymaker Joachim Nagel, one of the ECB’s more hawkish members, noted that “heightened uncertainty will not quickly disappear.” Therefore, the central bank “would be well advised to act prudently and to make data-dependent decisions on a meeting-by-meeting basis.” The cautious stance on rate cuts of the ECB might strengthen the EUR against the USD.

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