- EUR/USD is set to rebound from a low reached over two weeks ago as traders rethink the implications of Trump’s tariff threat.
- President Trump has issued a warning about a potential 30% tariff on all imports from the EU, effective August 1st.
- The EU Commission is planning a second measure aimed at US imports valued at 72 billion euros.
The Euro (EUR) is likely to recover against the US dollar (USD) on Monday after hitting a low for more than two weeks as traders reevaluate the escalating trade tensions between the US and the EU.
The EUR/USD pair faced pressure following President Trump’s weekend announcement of a potential 30% tariff on European imports starting August 1. However, there’s been some stabilization thanks to hopes around possible negotiations and a cautious optimism that has helped the Euro regain some lost ground during US trading hours.
Currently, the EUR/USD pair is at approximately 1.1689, showing a slight recovery after dipping to an intraday low of 1.1654 earlier in the European session. At the same time, the US Dollar Index (DXY), which compares the dollar against a basket of six major currencies, remains steady below the significant 98.00 level, as investors adopt a more cautious stance ahead of key inflation figures from the Consumer Price Index (CPI) and other trade-related news.
Reacting to the tariff threat, the EU announced on Sunday that it would postpone its counter-tariffs against the US until early August, aiming to maintain diplomatic relations. President Ursula von der Leyen highlighted that Brussels is dedicated to seeking a negotiated solution, while cautioning that the proposed US tariffs could have “serious consequences” for transatlantic trade. The EU is reportedly preparing a two-tiered response plan, involving targeted tariffs worth 72 billion euros.
European Trade Commissioner Malos Schiffchovich stated on Monday that the Commission has devised measures for the next tranche and has shared them with EU member states. This new list aims to cover US imports valued at around 72 billion euros ($84.1 billion), significantly broadening the block’s potential response amidst ongoing tensions with Washington.
“Our countermeasures on steel and aluminum will be delayed until early August,” Sifchovich mentioned at a press briefing in Brussels. “Today, we are sharing proposals for a second list of products with Member States, who will begin discussions shortly.”
This new set of proposals adds to earlier packages of tariffs valued at 21 billion euros, primarily targeting US steel and aluminum products. Officials from the EU insist that while they remain open to negotiated solutions, they are fully prepared to defend their economic interests if needed.
Looking ahead, this week’s economic calendar is crucial for the EUR/USD trajectory, especially with eurozone inflation data set to be released on Thursday, alongside the more anticipated US Consumer Price Index on Tuesday.
