- EUR/USD is facing challenges as the US dollar remains steady amid anticipated developments in US-EU trade.
- U.S. Secretary of Commerce Howard Lutnick expressed optimism about a potential agreement between the US and the EU.
- The US dollar may encounter difficulties as uncertainty regarding the Federal Reserve’s interest rate outlook increases.
Following a profitable previous session, EUR/USD saw a dip, trading around 1.1620 during Monday’s Asian hours. Traders are being cautious, particularly with new trade tensions looming ahead of the US tariff deadline on August 1, which could lead to a decline in the pair as the USD remains stable.
In a recent CBS News interview, Lutnick conveyed his confidence that the current administration will finalize trade agreements with key US partners in the next few weeks, just before the impending tariffs take effect. “The next two weeks will be significant. President Trump aims to deliver for the American people,” he noted.
Additionally, Lutnick indicated that reaching a trade deal with the EU is plausible but underscored that August 1 is a firm deadline. He mentioned recent discussions with European negotiators, suggesting there’s adequate room for compromise. “These are the two largest trading partners in the world working together. I’m confident we’ll finalize the deal,” he stated.
Nevertheless, the EUR/USD pair could see limits to its decline, as market sentiment surrounding potential Federal Reserve interest rate cuts is emerging after remarks from Fed officials.
Last week, San Francisco Fed President Mary Daly stated that anticipating two rate cuts this year is a “rational” expectation, cautioning against delays. She noted that rates will likely settle above 3% eventually.
Fed Governor Christopher Waller commented that while the overall labor market is performing well, the private sector is lagging. He suggested the Fed should lower its interest rate targets in July, citing growing economic uncertainties.
