Dollar rises as trade deal favours US

EURUSD moves little after registering more than 1% losses in the previous session, trading around 1.1590 during the Asian hours on Tuesday. The pair faced challenges as the US Dollar rose on trade optimism, driven by the trade deal between the US and the European Union.

The US and EU reached a framework trade agreement in Scotland on Sunday that sets 15% tariffs on most European goods, taking effect on August 1. This deal has ended a months-long stand-off, according to Bloomberg.

European Commission President Ursula von der Leyen said that the bloc agreed not to impose retaliatory tariffs and pledged $600 bln in investment in the US on top of existing expenditures, as well as some $750 mln in purchase of American energy.

European Central Bank policymaker Peter Kazimir said on Monday that there is “no significant change” compelling him to act in September, noting that it would require “clear signs of a deterioration in the labour market” to prompt a move.

Kazimir acknowledged that the US-EU trade deal has reduced uncertainty, though its impact on inflation remains unclear.

France condemned on Monday, stating that the framework trade agreement was a “dark day” for Europe, arguing that the bloc had capitulated to US President Donald Trump by accepting an unbalanced deal that imposed a headline 15% tariff on EU goods.

German Chancellor Friedrich Merz warned that the agreed tariffs would cause “significant” damage to his country’s economy.

(Source: OANDA)