Euro fell in European trade on Friday on track for the fourth loss in a row against the US dollar, plumbing a week low and about to mark the biggest weekly loss in 2025 after the European Central Bank’s rate cut.

ECB policymakers hinted at yet another rate cut in March amid ongoing concerns about the weak performance of the eurozone economy. 

The EUR/USD

The EUR/USD pair fell 0.15% today to $1.0376, a week low, with a session-high at $1.0402.

The pair closed down 0.3% on Thursday, marking the third loss in a row after the ECB’s policy meeting.

Weekly Trades 

The common currency is down 1.1% so far this week against the dollar, on track for the first weekly loss in three weeks, and the largest this year.

It comes amid concerns about a wider eurozone-US interest rate gap, and with US President Donald Trump’s tariff threats towards the EU.

ECB

As expected, the European Central Bank cut interest rates by 25 basis points this week to 2.9%, the lowest since December 2022, and the fifth such cut since the start of the current policy easing cycle in June 2024.

The bank said the rate cut decision is based on the latest analysis of inflation outlook and the impact of the monetary policy.

The ECB noted that inflation has achieved noticeable improvement, and will likely return to the 2% medium-term target this year.

Lagarde 

ECB President Christine Lagarde said the decision to cut rates is linked to the latest eurozone data and especially inflation.

Lagarde said that inflation has started to dip considerably and is moving sustainably towards the target, however the monetary policy overall remains restrictive. 

European Rates

Media sources said that ECB policymakers expect an additional rate cut at the March meeting. 

The current market pricing for an ECB 0.25% rate cut in March stood at 85%. 

Rate Gap

The eurozone-US interest rate gap currently stands at 160 basis points in favor of the US, which impacts the euro’s standing against the greenback.

The yen fell in Asian trade on Friday against a basket of major rivals away from a six-week high against the dollar on profit-taking.

Despite the decline, the yen is on track for the best monthly performance in January since 2018 as the Bank of Japan is expected to continue normalizing monetary policies and raising interest rates this year, while other global central banks continue to cut rates and ease policies. 

The Bank of Japan is also changing the make-up of its members with a focus on bullish and hawkish voices that support the path of normalization. 

The Price

The USD/JPY rose 0.4% to 154.87 yen per dollar, with a session-low at 153.91.

The yen rose 0.6% yesterday against the dollar to near a six-week high at 153.71. 

Monthly Trades

The yen is up 1.6% so far in January on the dollar, about to mark the second monthly profit in three months, and the best since 2018.

The BOJ 

The Bank of Japan voted to raise interest rates by 25 basis points at the January 23-24 meeting to 0.5%, the highest since 2008, and the third such Japanese rate hike since policy normalization started last year. 

It was an 8-1 margin vote in favor of the hike, indicating increasing confidence by Japanese policymakers in the pace of growth for wages and prices.

The BOJ decided at the March 2024 meeting to exit negative rates, and raised short-term interest rates by 20 basis points then to 0.1%, the first such hike since 2007.

Bank of Japan Governor Kazuo Ueda nominated a new BOJ member known for her hawkishness, Junko Kueda, to be joining the BOJ board in March.

She’s known for her support of a more restrictive approach to monetary policy, and will replace a known dove on the board, which dominated the BOJ for the past decade. 

Ueda has taken serious steps towards policy normalization as inflation remains above the target for three years now. 

Oil prices rose on Thursday amid concerns about the impact of US trade tensions on crude supplies, as President Donald Trump threatens tariffs on both Mexican and Canadian crude imports. 

Trump’s candidate for the trade ministry said in a statement that both Canada and Mexico can avoid the tariffs if they took serious measures to prevent drug traffic. 

The OPEC+ meeting will be held in early February and is expected to discuss efforts by the US to increase output. 

On trading, Brent April futures rose 0.4%, or 28 cents to $75.89 a barrel.

US crude futures due in March rose 0.15%, or 11 cents to $72.73  a barrel.

Gold prices rose on Thursday as the dollar dipped against most major rivals, with the previous metal attracting haven demand amid concerns about Trump’s trade policies and the Fed’s policy statement. 

Earlier data showed US GDP growth clocked in at 2.3% in the fourth quarter of 2024, below estimates of 2.7%, and down from 3.1% in the third quarter. 

US unemployment claims fell to 207 thousand in the week ending January 25 from 223 thousand in the previous reading, besting expectations of 224 thousand. 

The Federal Reserve decided yesterday to maintain interest rates unchanged at 4.25% as it takes a more cautious approach to policy easing. 

Now markets await US consumer spending data tomorrow, expected to show a 0.2% increase in December.

Otherwise, the dollar index fell 0.1% as of 20:39 GMT to 107.7, with a session-high at 108.1, and a low at 107.5. 

On trading, gold spot prices rose 1.8% as of 20:39 GMT to $2844 an ounce, surpassing $2800 for the first time ever.