The euro continued to depreciate, sliding to $1.14—its lowest point since mid-June—as the dollar maintained its upward momentum following the announcement of a controversial transatlantic trade deal. The greenback surged after the U.S. Federal Reserve maintained its monetary policy stance, stirring market unease in the Eurozone.
Investors responded negatively to the newly signed U.S.-EU trade agreement, which imposed 15% tariffs on most European goods—averting the harsher 30% levies earlier threatened by President Donald Trump. Critics argue the deal heavily favors U.S. exporters, causing Eurozone uncertainty.
The U.S. dollar index climbed 2.1% in July, on track for its strongest monthly performance since 2019. The bullish shift follows months of weakening performance in the first half of 2025, suggesting renewed confidence in U.S. fiscal stability.
Although the Fed left interest rates unchanged, Chair Jerome Powell’s hawkish tone—hinting at no guaranteed rate cut in September—fueled the dollar’s rally. Meanwhile, Eurozone GDP data showed a sharp slowdown in Q2, growing by just 0.1% versus 0.6% in Q1, despite beating stagnation forecasts. The uneven growth pattern—contractions in Germany and Italy, expansions in France and Spain—highlighted the bloc’s economic vulnerabilities.
In financial markets, expectations for the European Central Bank to lower interest rates have now been delayed further, with markets projecting a 90% chance of a 25bps cut by March 2026, and only 30% odds for a December 2025 move.
Monex Europe analysts suggested the euro’s weakness may be short-lived, citing resilient French GDP growth (0.3%) and prospects of a medium-term economic recovery in the Eurozone. The euro dipped 0.2% to $1.1522 after touching a one-month low of $1.1515 on Tuesday.
