EUR/USD slides as risk appetite improves, Trump tariffs fuel uncertainty

• EUR/USD drops 0.30% as S&P 500 hits record high.
• Trump confirms 25% auto tariffs, adding trade policy uncertainty.
• Eurozone sentiment improves, but ECB's Holzmann signals possible March rate cut.

The Euro is set to end Tuesday's session with more than 0.30% losses against the Greenback as the S&P 500 notches a record high during the North American session. At the time of writing, the EUR/USD trades at 1.0445 below its opening price.

Euro weakens despite improved Eurozone sentiment, ECB rate cut chatter

Risk appetite has improved, yet US President Donald Trump reiterated that he will be applying 25% tariffs on imported automobiles. He added that he will announce large companies that are getting back into the United States (US), related to chips and cars.

The EUR/USD recovered during the last couple of weeks amid the progress of peace talks linked to the Ukraine-Russia conflict.

Earlier, a high-level meeting between high-level US officials and Russia's policymakers met for the first time, in a meeting that excluded Ukraine from initial discussions. Consequently, Ukraine's President Volodymyr Zelenskiy postponed its visit to Saudi Arabia planned for Wednesday until the next month, with sources saying the decision was made to avoid giving "legitimacy" to Russia-US talks.

In February, the US NY Fed Empire State Manufacturing Index surged from -12.6 to 5.7. Oliver Allen, Senior US Economist at Pantheon Macroeconomics, said, "The general improvement in the Empire survey in recent months has mirrored the upturn in the headline ISM manufacturing index."

Other data showed the NAHB Housing Market Index sliding 5 points from 47 to 42 due to elevated mortgage rates and strained inventory of existing homes.

Across the pond, the Eurozone (EU) ZEW Economic Sentiment Index in February improved from 18 to 24.2, suggesting that consecutive rate cuts by the European Central Bank (ECB) have improved the economic outlook.

In the meantime, ECB's Holzmann said there's a probability of a March rate cut, though he said that decisions in favor of additional easing are becoming more demanding, according to Bloomberg.

On Wednesday, the EU's economic docket Is absent. In the US, the latest FOMC meeting minutes, Housing Starts and Building Permits for January.