Meeting in Scotland yesterday, US President Donald Trump and European Commission president Ursula von der Leyen said the deal provided for an import tariff of 15% on EU goods, half the rate Trump had threatened from Aug 1.
That follows last week’s US agreement with Japan, while top US and Chinese economic officials will resume talks in Stockholm oday, aiming to extend a truce by three months and keep sharply higher tariffs at bay.
The euro was last at US$1.1693 EUR=, down 0.4% on the day, reversing an initial knee-jerk rise in Asia trade as investors’ focus shifted to what an easing in global trade tensions meant for the dollar overall.
“The mood music on US trade negotiations has been a little brighter following agreements with Japan and the EU,” said Paul Mackel, global head of FX research at HSBC.
“If more ‘trade deals’ are reached, this could help to reduce this source of policy uncertainty that has weighed against the dollar, at least for now.
“It could also see other factors such as relative yields becoming more influential,” Mackel said.
The dollar tumbled sharply earlier this year, particularly against the euro, as fears dramatically higher tariffs on trade with most of its major partners would hurt the US economy caused investors to consider shifting out of US assets.
Normally the gap between yields on government bonds is a major factor for currency moves, but at present the euro is meaningfully higher than the gap between US and euro zone yields would imply.
The euro was also last down slightly on the yen and sterling, having hit a one-year high on the Japanese currency, and a two-year high on sterling at the start of trade.
The dollar was stronger elsewhere, up 0.15% on the yen at ¥147.83, while the pound was down 0.13% at US$1.3428.
As concerns subside about the economic fallout from punishing tariffs, investor attention is shifting to corporate earnings and central bank meetings in the US and Japan in the next few days.
Both the Federal Reserve (Fed) and the Bank of Japan are expected to hold rates steady at policy meetings this week, but traders will watch subsequent comments to gauge the timing of the next moves.
Investors will also be watching to see Trump’s reaction to the Fed’s decision.
The US President has been putting the Fed under heavy pressure to make significant rate cuts, and Trump appeared close to trying to fire Powell last week, but backed off with a nod to the market disruption that would likely follow.
In cryptocurrencies, Ethereum jumped 1.7% and reached as high as US$3,940.25, the most since December 2024.