The euro has edged lower in the Thursday session. Currently, EUR/USD is trading at 1.2295, down 0.14% on the day. On the release front, German Industrial Production declined 0.1%, missing the estimate of 0.6%. This marked the fourth decline in the past five months. In the US, the focus is on employment reports. Wage growth is expected to tick lower to 0.2%, while Nonfarm Payrolls are forecast to improve to 205 thousand.
The ECB sent a mixed message on Thursday, triggering strong movement from the euro. As expected, the ECB dropped its easing bias, which was the option to increase monthly purchases if the economy softens. This sent the euro higher, but only briefly, as ECB President Mario Draghi was decidedly dovish at his press conference. Draghi said that eurozone inflation could remain subdued, so the Bank’s monetary policy would remain ‘reactive’. The comments were not well received by investors, as the euro slipped close to 1 percent on Thursday.
The EU is seeing red after US President Trump made good on his threat, and signed an order imposing 25% tariffs on steel imports. EU policymakers have threatened to retaliate with tariffs on US goods, and European Commission President Jean-Claude Juncker was particularly blunt, saying “we can also do stupid”. Fears of an all-out global trade war are weighing on the US dollar and the stock markets, and the resignation of Gary Cohn, a senior economist in the White House who opposed the tariffs, will only dampen investor risk appetite. The ball is now in the EU court, and if the Europeans retaliate and Trump responds with further tariffs, we could see some sharp movement from EUR/USD.