EUR/USD Recovers From Lows as USD Rally Eases Before GDP Data

EUR/USD Recovers as USD Rally Fades Before US GDP Release

The EUR/USD pair recovered modestly on Thursday, bouncing from session lows at 1.1213 to 1.1285, as the US Dollar (USD) lost steam ahead of the key US GDP data release.

US Court Ruling Spurs Market Volatility

In the Asian session, a US federal court ruling struck down President Donald Trump’s "Liberation Day" tariffs, sending the USD to a ten-day high as risk sentiment surged. However, the relief rally began to fade in Europe, allowing the Euro (EUR) to retrace some of its losses.

The court determined that Trump exceeded his constitutional authority, reinforcing the principle that only Congress controls trade policy. While the US government has appealed the decision, markets viewed it as a short-term positive for global trade.

Euro Faces Fundamental Headwinds

Despite the rebound, subpar Eurozone macroeconomic data continues to pressure the common currency. Investors remain cautious, with expectations the European Central Bank (ECB) could signal dovish policy action in response to weakening inflation and employment trends.

Market Outlook: Eyes on US GDP

The focus now shifts to the second estimate of US Q1 GDP, due later today. A strong report could reignite USD strength and weigh again on EUR/USD, while a weaker figure may validate the market's dovish stance on Federal Reserve (Fed) policy into 2025.

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