EUR/USD weakens below 1.0400 as traders brace for US PCE release

• EUR/USD trades in negative territory near 1.0390 in Friday's Asian session, losing 0.16% on the day. 
• The threat of escalating tariffs drags the Euro lower against the US Dollar. 
• Fed officials signaled interest rates likely on hold for a while. 

The EUR/USD pair remains under selling pressure near 1.0390 during the Asian trading hours on Friday. The Euro (EUR) weakens against the US Dollar (USD) amid the risk-off mood. The US Personal Consumption Expenditures (PCE) Price Index will take center stage later on Friday. 

US President Donald Trump said late Thursday that 25% duties on imports from Canada and Mexico will come into effect on March 4, not April 2, as he had suggested the day prior. Trump further stated that goods from China will be subject to an extra 10% duty. He also this week promised 25% tariffs on shipments from the European Union. Tariff uncertainty from Trump is likely to weigh on the shared currency in the near term. 

Cleveland Fed President Beth Hammack said on Thursday she expects US central bank interest rate policy to be on hold for the time being amid a hunt for evidence that inflation pressures are easing back to the 2% goal. Meanwhile, Atlanta Fed President Raphael Bostic said late Wednesday that the Fed should hold interest rates where they are, at a level that continues to put downward pressure on inflation. The cautious stance of the Fed might lift the Greenback and act as a headwind for EUR/USD. 

The US PCE inflation data for January will be in the spotlight later on Friday. This report could influence market speculation for the Federal Reserve's (Fed) monetary policy outlook. Any signs of softer inflation in the US economy could undermine the USD and help limit the pair's losses. Financial markets are now pricing in nearly 68% odds that the Fed will cut its interest rate in the June policy meeting after holding them in the March and May meetings, according to the CME FedWatch tool.