Weaker US dollar creates additional hurdle for exporters
Having strengthened in the immediate aftermath of Donald Trump's election victory last year, the dollar has steadily slipped against the euro since the start of 2025.
Compared to mid-January, the euro is currently up almost 15% against the US currency.
"There's been a number of factors contributing to it but a lot of it has to do with the presidency of Donald Trump," said Roman Ziruck, senior market analyst at Ebury.
"Markets are concerned with the trade issues - we see that the US has moved on to a trade protectionism path and this is something that is casting shadows on its economic prospects," he said.
"Also markets have been relatively concerned with the US fiscal situation - the US has been running significant fiscal deficits in recent years, even though its economic activity has been rather strong. So it's quite uncharactaristic of the period. And the One Big, Beautiful Bill, which passed the Senate just yesterday, is promising to increase the US debt in the coming years," he added.
Markets are also uneasy about attempts by the US President to influence central bank policy - through his criticism of their interest rate stance, and indications that he is considering a change in the Federal Reserve's leadership.
"This is something that we have not really witnessed in developed economies in recent years," said Mr Ziruck. "This is something that we are more likely to see in emerging markets - but even in those places it's not particularly common."
With a deadline on US-EU trade talks looming, and suggestions that a 10% tariff will become the "new normal" for firms, a weaker dollar presents an extra level of pressure on exporting firms.
"It's another hurdle," he said. "The EU is an exporting economy - it's going to be an issue, it's something that is leading to a deterioration in the economic prospects in the near term. But longer-term prospects are helped by [Germany's] fiscal stimulus."
The weaker dollar may offer some relief to consumers in certain areas, though, not least those that are travelling to the US in the coming weeks.
Given that oil is priced in dollars, it also presents a potential benefit there too - especially as global oil prices have fallen back from their recent highs in the wake of attacks between Israel and Iran.
"We have seen a significant reversal in the oil futures and right now we are back to levels where we were before the onset of the Israel-Iran conflict," said Mr Ziruck.
"If we price that in euros, that certainly is a factor that should be contributing to a slightly calmer price environment in the euro zone," he added.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Journal
an hour ago
- The Journal
Trump to start informing countries of US tariff rates as EU yet to reach deal
US PRESIDENT DONALD Trump has said he plans to start sending letters informing trading partners of their tariff rates as soon as today, as negotiations to avoid higher US levies enter the final stretch amid the approaching deadline. 'My inclination is to send a letter out and say what tariff they're going to be paying,' he told reporters on Thursday. 'It's just much easier.' He added: 'We're going to be sending some letters out, starting probably tomorrow.' His comments come days before steeper duties are set to take effect on dozens of economies – customised to each of them – ranging from Taiwan to the European Union. The tariffs were announced in April, where Trump imposed a 10% duty on goods from almost all trading partners, with a plan to step up these rates for a select group within days. But he swiftly paused the hikes until 9 July, allowing for trade talks to take place. Advertisement Since then, countries have been pushing to strike deals that would help them avoid the tariff rates. US officials have signaled that there could be a flurry of trade pacts announced in the coming days. But so far, the Trump administration has only unveiled deals with the UK and Vietnam, while Washington and China agreed to temporarily lower staggeringly high levies on each other's products. As his July deadline approaches, Trump has repeatedly said he plans to inform countries of US tariff rates by sending them letters. 'The work continues' The Republican leader had threatened to impose a 50% tariff on 9 July on the EU if it cannot secure a deal . Negotiations, at the time, had stalled, but European leaders say there has been a positive change and remain ongoing. The EU's trade commissioner Maros Sefcovic was in Washington this week in an attempt to negotiate a deal. Tánaiste Simon Harris was among those last week to back a zero-tariff trade agreement. Wrapping up a productive week of work in Washington, DC. It was good to meet with @USTradeRep @jamiesongreer , Secretary @howardlutnick , and @SecScottBessent . Heading back to Brussels - the work continues. Our goal remains unchanged: a good and ambitious transatlantic trade deal. — Maroš Šefčovič🇪🇺 (@MarosSefcovic) July 4, 2025 Related Reads 'We need an agreement': Tánaiste Harris calls on EU to reach tariff deal with US Ireland seeking that EU avoid implementing counter tariffs on the US, cabinet to hear But a deal has yet to be struck. Posting on social media late last night, Sefcovic said he was 'wrapping up a productive week in Washington'. 'Heading back to Brussels – the work continues,' he wrote. 'Our goal remains unchanged: a good and ambitious transatlantic trade deal.' Should a mutual agreement not be reached, the EU has said it will impose its countermeasures on the US on 14 July. There are serious concerns that the US's response to the EU's countermeasures could impact Ireland's lucrative aviation, pharma, drinks and agri-food industries . With reporting from © AFP 2025 Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
RTÉ News
2 hours ago
- RTÉ News
Key provisions in Donald Trump's 'Big Beautiful Bill'
US Republicans have passed a major legislative package, dubbed the "One Big Beautiful Bill," giving President Donald Trump the biggest legislative victory of his second term. After weeks of closed-door negotiations over the sprawling text and several day-and-night debates, the House of Representatives narrowly approved a final version of the bill. Mr Trump is set to sign the bill into law today, Independence Day. Here are some key provisions in the 869-page text: Taxes Income tax cuts passed under Mr Trump's first term become permanent Creates new tax deductions for tips and overtime pay - a major Trump campaign pledge - but only through 2028 Allows businesses to immediately deduct research and development expenses Temporarily quadruples a tax deduction for state and local taxes (SALT) Immigration crackdown $46.5 billion (€39.5b) for border infrastructure, including wall construction $45 billion to create an additional migrant detention facilities with 100,000 beds New funds to hire 10,000 Immigration and Customs Enforcement (ICE) officers Creates new fines for asylum seekers and migrants caught trying to illegally enter the country Clean energy cuts Rolls back clean energy tax credits from former president Joe Biden's own marquee spending bill, the Inflation Reduction Act Phases out federal subsidies for new wind and solar energy projects if they do not enter service before 2028 or if construction begins more than one year after the bill's enactment Ends a $7,500 tax credit for EV purchases after September 30, 2025 -- drawing particular ire from Trump's former top ally, Tesla CEO Elon Musk Creates a tax credit for producing metallurgical coal, used largely in steel production Debt Limit Increases nation's borrowing limit by $5 trillion Creates new restrictions on welfare for the poor and disabled, particularly the Medicaid health insurance program and SNAP food assistance program Requires able-bodied individuals under age 65 and without young children to work at least 80 hours per month to receive Medicaid or SNAP Creates $50 billion, five-year fund to support rural hospitals to partially offset larger cuts Women's health Blocks federal funding for one year to Planned Parenthood, a nationwide women's health organisation often targeted by Republicans over its abortion services. Other provisions
RTÉ News
2 hours ago
- RTÉ News
Cadbury-parent Mondelez calls for delay to EU deforestation law
Cadbury chocolate maker Mondelez is urging a one-year delay in the implementation of the European Union's deforestation law, a senior company executive said. The company supports the EU Deforestation Regulation (EUDR) in principle, Massimiliano Di Domenico, vice president of corporate and government affairs for Europe said, but urged policymakers to account for "on-the-ground realities." Di Domenico was speaking at the European Parliament last week and later posted his comments on LinkedIn. In July last year, Reuters reported that Nestle, Mars Wrigley, and Ferrero backed the law in a joint paper, while urging Brussels to provide clearer guidance and support to help companies meet the compliance deadline. The proposed law, which aims to end 10% of global deforestation fuelled by EU consumption, requires companies and traders importing soy, beef, cocoa, coffee and related products to prove their supply chains do not contribute to the destruction of the world's forests, or face hefty fines. Di Domenico said the cocoa sector is "under huge pressure" due to soaring prices, declining production, and digital infrastructure gaps in origin countries which could affect compliance and disrupt supply chains. "That's why we are respectfully, transparently and responsibly calling for a 12-month delay - not to dilute ambition, but to enable practical, inclusive, and effective implementation," Di Domenico said in his post. The EU has already delayed its launch by a year to December 2025, following complaints from trading partners including Brazil and the US, and cut back reporting rules after industry criticism.
