The euro edged up 0.02% to $1.1651 on Thursday as the European Union and the United States moved forward with a trade pact that could cut tariffs on key sectors, while stronger Eurozone business activity data added support.
A joint EU–US statement outlined new benchmarks for tariff reductions on cars, pharmaceuticals, and semiconductors, deepening commitments announced in a preliminary deal last month. The news encouraged investors to open fresh euro positions, though the currency remains confined to a narrow trading range this week.
The single currency also drew strength from S&P Global’s flash Eurozone Composite PMI, which rose to 51.1 in August from 50.9 in July — the highest in 15 months and signaling a third straight month of expansion. Rising new orders and price pressures bolstered expectations that the European Central Bank may slow its pace of rate cuts.
Despite the gains, analysts at ING noted EUR/USD is likely to remain in a tight 1.1620–1.1670 band ahead of Federal Reserve Chair Jerome Powell’s speech on Friday. Meanwhile, EUR/CHF slipped to 0.9370 after a recent rally, and analysts flagged firmer oil and gas prices as a mild headwind for the euro.
The latest trade deal progress also reassured markets after the EU secured a settlement that averted steep 30% US tariffs, locking in a lower 15% rate. The euro has climbed 11% against the dollar so far in 2025, underpinned by fiscal expansion plans across EU member states to boost industry, infrastructure, and defense spending.
