FX.co ★ Euro Nears 2021 High Amid Progress on US-EU Trade Deal

The euro experienced a modest increase, rising to slightly above $1.175, approaching its highest point since August 2021. This movement came as trade tensions lessened following the news that the United States had proposed a deal to the European Union, maintaining a baseline 10% tariff. Notably, this proposal includes exemptions for certain sensitive sectors like aircraft and spirits. The EU is keen to reach a preliminary agreement with the US this week to extend the 10% tariff rate beyond the upcoming August 1 deadline while discussions for a permanent resolution continue. Additionally, investor sentiment received a boost when President Donald Trump decided against imposing extra tariffs on the EU before the July 9 deadline. In response, the EU disclosed plans to prepare retaliatory tariffs on various American goods due to US-imposed metal tariffs. Officials have cautioned that without an agreement, further measures such as implementing export controls and restricting US access to public contracts might be considered. On the monetary policy horizon, market analysts are now anticipating just one more rate reduction from the European Central Bank this year.