BUZZ-COMMENT-EUR/USD bears in control as tariff deadline looms

Feb 28 (Reuters) - The euro appears to be closing at the week around the lows as the single currency hovers around the 1.04 handle, with focus turning to next week’s March 4 tariff deadline for Canada and Mexico, which will be the key driver for FX.

The rhetoric so far suggests the Trump administration will go ahead with their threat. While not directly related to the EU, the U.S. placing aggressive tariffs on their closest neighbours could be seen by markets as a precedent for the rest of the world. And with French President, Emmanual Macron pessimistic on trade progress, this will likely embolden EUR/USD bears.

Elsewhere, the ECB will be on the docket, and a cut is widely expected, meaning that the focus will be squarely on the guidance and accompanying economic projections. The more hawkish members have opened the debate to consider a pause or halt to cuts in the near-term. However, given the uncertainty surrounding U.S. trade policy, doves are likely to hold the upper hand, favouring a continuation of 25bp back-to-back cuts until a 2% rate reached, currently priced for June.

Consequently, the path of least resistance remains skewed towards euro weakness.

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