FX.co ★ Euro Cuts Gains

The euro experienced an early rise to $1.176, but it subsequently erased those gains, depreciating by nearly 0.5% to hit $1.168, marking its lowest point in a week. This decline was driven by the strengthening of the dollar, as traders reacted to the announcement of a new US-EU trade agreement. The deal stipulates a 15% tariff on European exports, which is considerably lower than the initially threatened 30% rate by the US. Notably, certain items such as aircraft components and specific chemicals will be exempt from these tariffs, and the duties on automobiles will be reduced to 15%. Additionally, provisions require the EU to increase its purchases of US energy and to bolster its investments in the United States. While investors generally received the agreement positively, viewing it as a measure to ease trade tensions and encourage stability, the markets had largely anticipated its outcome. Furthermore, within Europe, the deal is largely perceived as unfavorable and punitive towards the EU. Concurrently, focus on monetary policy is shifting towards the Federal Reserve’s forthcoming decision expected later this week.