The U.S. dollar climbed against major currencies on Monday after Washington and Brussels agreed to a framework trade deal, easing fears of a full-blown global tariff war. Under the pact, the U.S. will impose a 15% tariff on most EU imports—a compromise from the 30% rate President Trump threatened to levy starting August 1.
With fresh U.S.–Japan trade terms already in place and high-level U.S.–China talks resuming in Stockholm to extend their truce by three months, investors sensed a return to normalcy in world trade. “Since early April, markets were selling U.S. assets in light of tariff uncertainties,” said Eugene Epstein, head of North American structuring at Moneycorp. “Now we’re seeing a semblance of stability.”
Currency Moves:
- Dollar vs. Euro: The euro slid 1.25% to $1.1591—its steepest one-day drop since mid-May—after an initial rebound in Asian trading.
- Dollar vs. Yen: The dollar gained 0.59% to ¥148.54, extending its recovery from earlier weakness.
- Dollar vs. Swiss Franc: The greenback rose 1% to 0.8033 francs.
- Dollar vs. Pound: Sterling eased 0.67% to $1.3355.
Analysts note that yield differentials would typically drive these moves, but today’s action reflects shifting trade-war expectations. “Few predicted such euro strength at the start of the year,” observed Anthi Tsouvali, a strategist at UBS Wealth. “Yet we still see longer-term dollar weakness.”
Equities and Yields:
U.S. equity benchmarks traded mixed but remained near record highs: the Dow dipped 0.3%, the S&P 500 fell 0.15%, and the Nasdaq added 0.14%. Treasury yields ticked higher; notably, the two-year note yield rose to 3.932%, signalling lingering Fed rate-cut uncertainty amid President Trump’s public pressure on the central bank.
Looking Ahead:
Attention now turns to this week’s Federal Reserve and Bank of Japan meetings, both expected to keep rates unchanged. Markets will parse post-meeting commentary for clues on when each central bank may next pivot.
Cryptocurrencies:
Digital assets also retraced losses on calmer risk sentiment: bitcoin eased 0.52% to $118,205, while ethereum fell 0.61% to $3,800.90.
