FX.co ★ Euro Remains Close to Four-Year High Amid Renewed Trade Optimism

The euro maintained its position above $1.17, remaining near its peak since August 2021, driven by optimism surrounding a potential trade agreement between the US and the European Union. This sentiment followed the recent announcement of an agreement between the US and Japan. However, investors remained cautious ahead of renewed tariff discussions between Washington and Brussels, with reports indicating that the EU is preparing countermeasures should negotiations falter ahead of the August 1 deadline. Concurrently, market attention is centered on the upcoming European Central Bank policy decision and the release of preliminary PMI data from the eurozone’s major economies. It is widely anticipated that the ECB will leave interest rates unchanged after eight consecutive reductions, as policymakers consider the effects of surprisingly steep US tariffs and a stronger euro on economic growth and inflation. Money markets are fully factoring in a 25 basis point rate cut by December, with an approximately 50% likelihood of it occurring as soon as September.