The euro edged lower against the US dollar on Monday, sliding toward $1.17 as investors awaited clarity on upcoming US tariff measures and their potential global impact.
Markets paused amid mixed reactions to the US administration’s proposed tariffs, while forex traders leaned toward the greenback following a stronger-than-expected US jobs report and speculation around an easier path to rate cuts as Donald Trump signals plans for a shadow Federal Reserve chair.
The European Union said it was making progress toward a preliminary trade agreement with the US to avoid a major tariff escalation, proposing a universal 10% tariff on many goods while considering reduced rates for critical sectors such as pharmaceuticals, alcohol, semiconductors, and commercial aircraft. At the same time, the EU announced it was preparing retaliatory tariffs on a range of US products in response to President Trump’s metal duties, warning that additional measures—including export controls and restrictions on US access to public contracts—could follow if no agreement is reached.
Meanwhile, US Commerce Secretary Howard Lutnick confirmed that the broader US tariff package, initially scheduled for July 9, has been postponed to August 1. In Europe, markets are now pricing in only one more rate cut from the European Central Bank for the rest of the year.
On the currency front, the US Dollar Index (DXY) has shown signs of recovery despite broader weakness this year, as the usual correlation between rate differentials and the dollar’s performance has weakened. Analysts note that elevated US policy uncertainty and structural factors—such as investor hedging against dollar fluctuations and current account pressures—have weighed on the greenback in recent months.
