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2025-07-29 17:03:07
Euro Hits Bottom! US-EU Trade Deal Reveals Imbalances, Rekindling Market Storm? ⑴ On the afternoon of July 29th, Beijing time, the euro fell to a one-month low against the US dollar, as investors realized that the terms of the US-EU trade deal clearly favored the United States and would provide limited support for the eurozone's economic outlook. ⑵ The euro fell 0.5% against the dollar at one point, hitting its lowest point since June 23rd. Following a sharp 1.3% drop on Monday, it was currently trading at 1.1565, down another 0.17%. ⑶ The French Prime Minister called the agreement a "dark day" for Europe, and German Chancellor Friedrich Merz also pointed out that the 15% tariffs in the agreement would cause "significant" damage to the German economy. ⑷ The euro had suffered its biggest single-day drop against the US dollar in over two months in the previous trading day, primarily due to market concerns about the growth outlook and falling eurozone government bond yields. (5) The trade agreement was interpreted by the market as "bad news" for Eurozone growth, causing the US dollar index to surge 1% overnight and rise another 0.2% to 98.811 on Tuesday, pushing the British pound to a two-month low of 1.3338. (6) Furthermore, Trump's tariff rhetoric continued to fuel market concerns, as he reiterated that tariffs of 15% to 20% would be imposed on trading partners that fail to reach separate agreements. (7) This week's market focus also included interest rate decisions from the Federal Reserve and the Bank of Japan. Although both were widely expected to remain on hold, Sweden's second-quarter GDP grew by only 0.1%, and the Swedish krona fell by 0.33%, indicating that economic data continues to influence market sentiment.
