- The EUR/USD is seeing positive movement thanks to a new trade agreement between the US and the European Union, which has alleviated concerns regarding broader trade tensions.
- The recent trade deal involves a 15% tariff on most goods imported from Europe.
- The Federal Reserve is anticipated to maintain benchmark interest rates within the 4.25% to 4.50% range during their meeting on Wednesday.
On Monday, during Asian trading hours, the EUR/USD was around 1.1770 following two consecutive days of losses. The Euro (EUR) has found support as the US (US) and the European Union (EU) reached a trade agreement over the weekend, which has helped ease fears of escalating trade conflicts.
The trade framework established on Sunday imposes a 15% tariff on a majority of European goods and took effect on August 1. This agreement effectively resolved a month-long impasse, according to reports.
European Commission President Ursula von der Leyen announced that there will be no retaliatory tariffs imposed and that an additional $600 billion will be pledged for the US, on top of existing expenditure.
Last week, the European Central Bank (ECB) indicated that its economic growth trajectory is consistent with prior forecasts, suggesting no immediate changes to interest rates. They also highlighted the necessity for more data before providing further guidance on policy direction.
Market participants are hoping that, at the Federal Reserve’s meeting on Wednesday, interest rates will be held steady between 4.25% and 4.50%. Many will be closely watching the FOMC press conference for hints about possible rate cuts starting in September. Current estimations suggest around a 62% likelihood of these cuts occurring in September, according to the CME Group’s FedWatch tool.
