The eurozone rose in European trade on Monday against a basket of major rivals, resuming gains against the dollar after a short hiatus on Friday and approaching seven-month highs on hopes for increasing spending in the eurozone. 

After the US tariffs on European products, the EU is now preparing a package of emergency measures to boost the most affected sectors of the economy.

Experts expect the tariff war to cause a US recession, which could prompt the Federal Reserve to conduct steeper rate cuts than its European counterpart.

The Price

The EUR/USD price rose 0.55% today to $1.1023, with a session-low at $1.0878.

The pair fell 0.8% on Friday, the first loss in three days on profit-taking away from a seven-month high at $1.1145.

The euro rallied 1.3% last week, the second weekly profit in a row on concerns about a US recession following Trump’s aggressive tariffs.

EU Spending

After the higher than expected 20% US tariff on EU imports, it’s widely expected the EU will take measures to spend more and underpin the economy.

European Commission President Ursula Von Der lyne described the tariffs as a pain hit to the global economy, and asserted the EU will issue countermeasures if negotiations with Washington failed.

US Recession

It’s now increasingly expected by analysts that the US economy will slow down and might even go into recession following the heavy tariffs.

Interest Rates

The Federal Reserve is expected to cut interest rates four times this year, while the European Central Bank is expected to cut rates three times by December. 

The Australian dollar tumbled on Monday against a basket of major rivals, widening losses for the second session against the US dollar and trading below 60 cents, thus plumbing five-year lows.

It comes amid mounting concerns about an aggressive global trade war that could put the world economy into recession, boosting the odds of multiple Australian rate cuts this year.

The Price

The dollar index fell 1.8% today to $0.5933, the lowest since March 2020, with a session-high at $0.6029.

Aussie lost 4.6% on Friday against the greenback, the first loss in four days, and the heftiest since October 2008.

Aussie also lost 3.95% last week, the second weekly loss in three weeks, and the heftiest since March 2020.

The massive losses come as the global markets are shaken by US President Donald Trump’s aggressive tariffs on all imports.

Global Recession

Concerns about a global economic recession are surging, after Trump imposed a 10% base tariffs on all imports, with a higher 20% tariff on the EU, 34% on China, leading to severe disruption in global markets.

Such tariffs directly target vital sectors such as automobiles and industrial products, and will hit global trade considerably, with JPMorgan estimating a 60% chance of a global recession this year.

Oil prices also tumbled to four-year lows, while US stocks lost $5 trillion of their value in just two days, with Chinese demand slowing down and US inflation expected to rise by 0.7%, thus triggering concerns about long-term consequences. 

Australian Rates

The odds of a Reserve Bank of Australia 0.25% interest rate cut in May surged to 90%.

The odds of a bigger 0.5% cut in May stood at 20%.

US stock indices slumped on Friday and marked their biggest two-day drop in history, losing a staggering $11 trillion of value since the inauguration of US President Donald Trump, with the NASDAQ entering bearish territory.

China just slapped all US imports with 34% tariffs starting April 10, in response to Trump’s latest tariffs on Chinese imports.

US President Donald Trump announced new historic reciprocal tariffs on many countries, that start with a base 10% and rise by many folds depending on the country.

He described the new tariffs as “a declaration of independence” and today as the “liberation day”.

Otherwise, earlier US data showed the economy added 228 thousand new jobs in March, after adding 117 thousand in February, while unemployment rose to 4.2%.

Speaking in Virginia, Fed Chair Jerome Powell said he expects US President Donald Trump’s tariffs to cause higher inflation and slower growth.

He said the announced tariffs were much bigger than expected, and the Fed won’t change its monetary policies until the picture becomes clearer. 

At the close, Dow Jones slumped 5.5%, or 2231 points to 38,314 points, marking a weekly loss of 7.9%.

S&P 500 tumbled 5.97%, or 322 points to 5074 points, losing 9.1% of its value this week.

NASDAQ gave up 5.8%, or 963 points to 15,587 points, marking a weekly loss of 10%.

Cacao, coffee, and sugar prices tumbled on Friday on concerns about a global recession, which could tank demand with a global trade war erupting. 

China just slapped all US imports with 34% tariffs starting April 10, in response to Trump’s latest tariffs on Chinese imports.

US President Donald Trump announced new historic reciprocal tariffs on many countries, that start with a base 10% and rise by many folds depending on the country.

He described the new tariffs as “a declaration of independence” and today as the “liberation day”.

On trading, cacao futures tumbled 1.1% in London to 6611 pounds per metric ton, while falling 2.7% in New York to $9044 a ton.

Arabica coffee futures fell 3% to $3.7395 a pound, while Robusta coffee fell by the same amount to $5228 a ton.

Crude sugar prices slid 0.6% to 19 cents a pound, after a 2.5% tumble on Thursday.