The euro weakened to $1.04, briefly touching its lowest level since February 12, as investors assessed economic data ahead of next week's European Central Bank policy meeting. They were also reacting to US President Donald Trump's announcement that a 25% tariff on Mexican and Canadian goods would come into force on Tuesday, as well as an additional 10% tariff on Chinese imports.

Trump also plans to impose 25% tariffs on EU imports, including cars and other goods. On the economic front, inflation in Germany was unchanged at 2.3% in February, but the key rate fell to 2.6%, its lowest level in over three years, while inflation in France fell more than expected to a four-year low of 0.8%. Meanwhile, inflation in Italy and Spain accelerated to 1.7% and 3% respectively, in line with expectations.

The ECB is expected to cut interest rates for the fifth time in a row on Thursday, signaling further cuts against a backdrop of slowing inflation and weak economic growth.