Euro retreats from peak

The euro traded near $1.17, a three-week low, as investors assessed ongoing trade developments. US President Trump announced that 30% tariffs would be imposed on imports from the European Union starting August 1, but later indicated he was open to negotiations. In response, the EU reiterated its commitment to securing a trade deal and said it would postpone emergency countermeasures and extend the suspension of planned retaliatory tariffs until early August to allow for continued dialogue. On monetary policy, investors largely expect the ECB to hold borrowing costs steady at next week’s meeting. However, markets are pricing in another 25 basis point rate cut later this year. Despite the recent decline in July, the euro has gained nearly 13% against the dollar since the start of the year, supported by broader dollar weakness and renewed optimism about the eurozone’s economic outlook, particularly after Germany moved to increase fiscal spending. The euro/dollar pair is trading around 1.1690.