EUR/USD hits four-year high as Trump slams Powell, US data disappoints

• EUR/USD hits its highest level since September 2021 and extends its rally for a sixth straight session.
• ECB’s De Guindos flags data-driven approach, warns of trade and geopolitical risks to Eurozone outlook.
• US GDP revised lower to -0.5% in Q1, the first contraction in three years. Jobless Claims ease but remain elevated.

The Euro (EUR) extends its winning streak against the US Dollar (USD) for a sixth consecutive day on Thursday, with EUR/USD soaring past the 1.1700 handle for the first time since September 2021, marking a nearly four-year high.

At the time of writing, EUR/USD is trading near 1.1700 during the American trading hours. The major driver behind the EUR/USD rally is the combination of robust Euro demand and sharp US Dollar weakness, fueled by renewed criticism of Fed Chair Jerome Powell from US President Donald Trump. Speaking at a press conference following the NATO Summit in The Hague, Trump called Powell “terrible,” accused him of being “very political,” and reiterated his demand for immediate rate cuts. He also revealed he is considering “three or four” potential replacements for Powell, whose term ends in May 2026. The comments have intensified concerns over potential political interference in US monetary policy, eroding confidence in the Fed’s independence, and adding to the bearish pressure on the Greenback.

European Central Bank (ECB) Vice President Luis de Guindos said on Thursday that future policy decisions will be guided by evolving trade dynamics, keeping the door open for additional rate cuts.

Speaking at the Deutsche Bank Forum, De Guindos flagged rising global trade tensions and geopolitical risks as key sources of uncertainty for Eurozone inflation and growth. He emphasized a data-dependent, meeting-by-meeting approach, highlighting sensitivity to energy prices, exchange rates and financial stability.

Meanwhile, fresh economic data released Thursday showed that the US economy contracted at an annualized pace of 0.5% in the first quarter of 2025 — a steeper decline than the previously estimated 0.2% fall and marking the first quarterly contraction in three years. The downward revision was primarily due to softer consumer spending and a sharp drop in exports, signaling deeper cracks in underlying demand.

In another sign of a cooling economy, US Initial Jobless Claims fell by 9,000 to 236,000 in the week ending June 21, coming in below expectations. However, claims remain elevated compared to the 2025 average, suggesting a waning momentum in the labor market despite the weekly decline.

On a more positive note, May’s Durable Goods Orders surged by 16.4% — well above market forecasts, offering a rare signal of resilience in the manufacturing sector. Still, the outsized rebound does little to offset broader concerns triggered by weak GDP growth and persistent labor market softness.

The stark divergence in data points has further muddied the Fed policy outlook, especially as political pressure mounts.

Looking ahead, market participants will closely watch Friday’s release of the Fed’s preferred inflation gauge — the Core PCE Price Index — for fresh insight into the timing of potential rate adjustments. Until then, EUR/USD is likely to remain buoyed by US Dollar weakness.