The euro rose in European trade on Thursday against a basket of major rivals, resuming gains against the dollar after a two-day hiatus and heading once more towards four-year highs as the dollar continues to face risks.

Chief of which are the ongoing US-China trade tensions amid mixed signals from US President Donald Trump on his plans for the China tariffs.

The Price

The EUR/USD price rose 0.4% to $1.1357, with a session-low at $1.1313.

The price fell 0.9% on Wednesday, the second loss in a row on profit-taking away from a four-year nadir at $1.1573.

The euro also lost ground after Trumps assurances that he wont sack Fed Chair Jerome Powell, and following grim eurozone services data.

Mixed Signals

Trump asserted the US goal of reaching a fair trade deal with China, however, he once more threatened new tariffs on Beijing if no deal is reached.

US Treasury Secretary Scott Bessent said Trump didnt propose to unilaterally remove tariffs from China, asserting the US will not cut tariffs on China by over 100%.

Bessent said theres no clear timeline for communications between both sides, with the process of complete trade rebalancing potentially taking two or three years.

The markets are beginning to see the Trumps administrations sensitivity towards the performance of the financial markets, with decisions such pausing reciprocal tariffs and backing off plans to sack Fed Chair Powell as reflections of such considerations.

European Rates

Reports indicated that several European Central Bank governors see a high chance of a rate cut in June.

President of the Deutsche Bundesbank Joachim Nagel said that German recession this year cant be ruled out.

European Central Bank President Christine Lagarde said the impact of tariffs could be seen on the PMI and unemployment numbers.

Lagarde expects the tariffs to have more of a deflationary role on prices rather than inflationary.

Markets are currently pricing in a 60% chance of an ECB interest rate cut in June.

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