US Dollar Rises Amid US-EU Trade Pact and Resumption of US-China Talks

The US dollar rose against major currencies, including the euro and yen, following a US-EU trade pact that averts a global trade war. The agreement provides for a 15% import tariff on EU goods, half the rate threatened by US President Donald Trump. The dollar also gained against the safe-haven Swiss franc and Japanese yen. The euro fell against the dollar, yen, and sterling, set for its biggest daily loss since mid-May.

The US dollar experienced a notable rise against several major currencies, including the euro and yen, following the announcement of a US-EU trade pact. This agreement, which provides for a 15% import tariff on EU goods, was seen as a significant step towards averting a global trade war. The dollar also strengthened against the safe-haven Swiss franc and Japanese yen, reflecting investor confidence in the deal.

The euro, which initially saw a knee-jerk rise in Asian trade, ultimately fell against the dollar, yen, and sterling. The euro's biggest daily loss since mid-May was set for Monday, July 28, 2025. This shift in currency values underscores the impact of the trade agreement on global markets.

Investor attention is now shifting to corporate earnings and central bank meetings in the United States and Japan. Both the Federal Reserve (Fed) and the Bank of Japan are expected to hold rates steady at their respective policy meetings this week. However, traders will be closely watching subsequent comments to gauge the timing of any future rate changes.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose by 1.5 basis points to 3.932% from 3.917% late on Friday. This increase highlights the market's anticipation of the Fed's decision and the potential impact on US economic policy.

The dollar's strengthening was also mirrored in cryptocurrency markets, with bitcoin and ethereum both experiencing declines. Bitcoin fell 0.52% to $118,205.38, while ethereum declined 0.61% to $3,800.90.

As concerns about the economic fallout from punishing tariffs subside, investors are focusing on the long-term implications of the US-EU trade agreement. The deal, which follows last week's US agreement with Japan, aims to extend a truce by three months and keep sharply higher tariffs at bay.

In summary, the US dollar's rise against major currencies reflects the positive market sentiment surrounding the US-EU trade pact. The agreement provides a measure of certainty in an otherwise uncertain global trade environment, which is likely to influence investor behavior in the coming days.

References:

[1] Reuters. (2025, July 28). Dollar rises against major peers after US-EU trade pact. Retrieved from https://www.reuters.com/world/middle-east/dollar-rises-against-major-peers-after-us-eu-trade-pact-2025-07-28/
[2] TradingView. (2025). USDCHF, USDJPY, EURUSD, USDDJI. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L6N3TP0PA:0-dollar-rises-against-major-peers-after-us-eu-trade-pact/
[3] FXStreet. (2025, July 28). EUR/USD plunges over 1% as US-EU deal boosts US dollar. Retrieved from https://www.fxstreet.com/news/eur-usd-plunges-over-1-as-us-eu-trade-deal-boosts-us-dollar-202507282318