The euro rose slightly on Monday following the announcement of a framework trade agreement between the United States and the European Union, the latest move to ease global trade tensions and avoid a full-scale trade war. Attention is now turning to upcoming central bank meetings in the United States and Japan.
اضافة اعلان
During a meeting in Scotland on Sunday, U.S. President Donald Trump and European Commission President Ursula von der Leyen agreed to impose 15% tariffs on most EU imports — half the rate previously threatened by Trump for August 1.
Following the news, the euro climbed to $1.1753, up 0.1% after initially gaining 0.3%. It also strengthened against the Japanese yen, reaching 173.64 yen, marking a fifth straight session of gains and hitting its highest level in a year.
Market Sentiment Shifts as Trade Tensions Ease
With fears over economic fallout from punitive tariffs subsiding, investors are turning their focus to corporate earnings and monetary policy meetings in Washington and Tokyo this week.
Rodrigo Catril, Senior Currency Strategist at National Australia Bank, said in a bank podcast:
“It could be a positive week simply because we now know the rules of the game... With increased clarity, there may be greater global readiness to invest, expand, and pursue opportunities.”
Still, a comprehensive U.S.–China trade agreement remains elusive, despite plans for high-level negotiators to meet in Stockholm on Monday. The dollar held steady at 147.65 yen, while the U.S. Dollar Index stayed at 97.582.
Central Banks in Focus
Both the Federal Reserve and Bank of Japan are expected to hold interest rates steady in their policy meetings this week. However, traders will closely monitor post-meeting statements for clues about future policy shifts.
President Trump also announced that the EU plans to invest around $600 billion in the U.S., including significant increases in purchases of energy and military equipment. This mirrors a similar deal struck with Japan last week, which involves $550 billion in investment and 15% tariffs on Japanese imports, including cars.
While some in Europe still view the 15% base tariff as excessively high, falling short of the EU’s goal of zero tariffs, the agreement provides short-term relief to markets.
Strategic Flows and Euro Outlook
Shoki Omori, Chief Desk Strategist at Mizuho Securities, noted that the investment clause may lead to capital outflows from Europe, bolstering the U.S. dollar over the longer term:
“Weak relative growth prospects and a deteriorating current account justify a gradual decline in EUR/USD once the initial boost fades.”
Meanwhile, China faces an August 12 deadline to finalize a long-term trade deal with the U.S. Talks in Stockholm are expected to result in a three-month extension of the current tariff truce, according to the South China Morning Post.
Broader Market Sentiment and Crypto Surge
Global equities and risk-sensitive assets received a lift ahead of a busy week for corporate earnings, with key results expected from Apple, Microsoft, Amazon, and Meta — four of the “Magnificent Seven” tech giants whose stock movements heavily influence benchmark indices.
In cryptocurrency markets, Ethereum jumped 1.5% to $3,905.79, its highest level since December 2024.
Meanwhile, the U.S. dollar gained strength last Friday, supported by robust economic data that suggested the Federal Reserve may hold off on further interest rate cuts for now.
GBP/USD traded at 1.3443, largely unchanged.
The Australian dollar held at $0.6568, and the New Zealand dollar at $0.6014.
Markets now await further cues from central banks and trade negotiations to assess the durability of the euro's upward momentum.
