EUR/USD, the euro: Europe’s yearning for world war days does not impress me.

Should I bet against the euro? At 1.0959 and not too cheery attitude out of the Eastern Central Bank, maybe I should find a contract and take the sell side.

Reuters cited ECB policymaker Isabel Schnabel’s belief that Europe is facing structural headwinds exacerbated by a surge in uncertainty that could get worse with U.S. tariffs. (Que the scary music …)

Other sour notes cited by Reuters included Nasdaq’s crash last Friday into a bear market as investors feared Mr. Trump’s tariffs would cause a global recession. The sour note from Asia is China’s response to Mr. Trump’s tariffs which included a 34% tariff of stuff China imports from the United States. And there is speculation that the six percent drop in the S&P 500 is due in part to what is perceived as a “wait and see’ approach by Jerome Powell, chairman of the Board of Governors of the Federal Reserve System, the central banking system of the United States.

Economists at Barclays, again according to Reuters, expect that inflation in the Unted States will exceed four percent while gross domestic product, a measure of national income, will contract in the fourth quarter of 2025.

Meanwhile, the hubbub in the media about Europe’s plans to boost its defense spending to counter the Russian Bear does not impress me. Just like the 2017 and 2025 Trump bumps, I found any impact on the economy either short-lived or unfounded.

Back to Europe, post-World War II, the European continent saw its share of blowups, particularly in central and eastern Europe. The advent of the European Union and the euro in the late 1990s and early 2000s seems to have tamped down the urge for European to reboot a world war …. well, until now.

But I still ask the question, why would anyone buy the euro? Even if there were no whining coming out of the U.S. about its fatigue from being the global consumer of last resort, would you still want to trade the euro?

I am betting that the euro, which peaked at USD1.1119 on 3 April, will continue to fall. I expect the fall to be erratic as the media continually scares us into looking at our 401(k)s on the hour every hour. I expect by 11 April at close of trade that the euro will fall between USD1.0809 and USD1.0931.

And before I forget. Happy First Contact Day!

Alton Drew

5 April 2025

Disclaimer: The above post is not to be viewed as legal or trading advice. I am here to share some of my thoughts on the markets, the economy, and an occasional movie review. Visit my page at “Meet Alton Drew” for more insights.