European Markets Rise as Dollar Slumps Amid ’Trumpcession’ Fears

By Staff, Agencies

European markets rallied while the euro surged to its highest level since the US election, as the dollar weakened against major currencies due to growing concerns over a potential US recession, dubbed the "Trumpcession".

The euro climbed above $1.09 for the first time since Donald Trump’s election win, reversing the earlier "Trump trade" that had strengthened the dollar.

US tariffs on Canada, Mexico, and China, along with potential European goods levies, could trigger an economic downturn, causing a 0.5% dollar drop against a basket of currencies.

Asian markets remain volatile following global stock sell-off, with Japan's Nikkei dropping and South Korea's market falling. Europe's DAX rose, while FTSE 100 dipped.

Stephen Innes of SPI Asset Management warns that market sentiment remains fragile due to fears of US economic growth slowing down due to aggressive tariffs and government spending cuts.

Tesla, Trump, and the economy

Trump supported Elon Musk amid Tesla's stock slump, accusing "Radical Left Lunatics" of attempting an "illegal" boycott. He also pledged to buy a Tesla car.

Tesla sales in Europe dropped significantly in January due to increased political involvement by CEO Elon Musk, according to the Financial Times.

The report stated Tesla's market share dropped due to Musk's controversial support for the far-right AfD in EU politics, causing backlash in Europe.

Warnings of a recession

Swiss bank UBS raised the likelihood of a US economic downturn to 30%, up from 25% last month. Investors, reacting to weak US economic data and a possible ceasefire in Ukraine, have shifted towards the euro and Japanese yen.

Analysts attribute the euro’s rise to the unwinding of Trump-era tariff policies, Germany’s fiscal shift, and the European Central Bank’s hawkish rate stance. 

Some predict the euro could reach $1.15 by year-end, with expectations that it may climb even higher in the coming years.