FX.co ★ Euro Steadies Near 4-Year High as EU, US Race to Finalize Trade Deal

The euro remained stable at approximately $1.17, hovering near its highest point since August 2021, as investors closely monitored updates from US-EU trade negotiations. The European Union is striving to finalize a preliminary agreement with the United States this week to solidify a 10% tariff framework ahead of the August 1 deadline, all while discussions for a permanent agreement continue. Reports on Tuesday suggested that the US has proposed maintaining a 10% baseline tariff, with specific exemptions for sectors such as aircraft and spirits. Nevertheless, Washington has shown reluctance to extend these exemptions to industries considered politically sensitive, such as automobiles, steel, aluminum, and pharmaceuticals, despite Brussels' appeals. Consequently, the EU is preparing retaliatory tariffs on a variety of US goods and has issued warnings of additional measures, including export controls and restrictions on US companies’ ability to win public contracts, should a deal fail to materialize. In terms of monetary policy, markets are anticipating only one more rate cut from the European Central Bank this year.