The U.S. dollar gained modest ground on Monday, while the euro slipped, following U.S. President Donald Trump’s announcement of a 30% tariff on European Union imports. Despite the geopolitical weight of the move, currency market reactions remained relatively subdued.
At 05:30 ET (09:30 GMT), the Dollar Index—which measures the dollar against six major global currencies—was up 0.1% at 97.577. The greenback added nearly 2% last week, marking its strongest weekly performance since early December.
Dollar Finds Support from Tariff Headlines
Trump’s weekend declaration of new 30% tariffs on imports from both Mexico and the EU has intensified global trade anxieties. The duties, set to begin August 1, leave little time for negotiating a resolution, especially after the original July 9 deadline was delayed.
Even with the tariffs looming, market reaction was relatively restrained—especially compared to the volatility that followed Trump’s “Liberation Day” tariffs in April.
“The moves have not been larger since investors see these threats as a Washington negotiating tactic to push the other side over the line into a deal,” said analysts at ING, in a note.
“Our baseline assumes that better deals than this get agreed by the 1 August deadline and that we are not going to see a repeat of the early April market shock in response to Liberation Day tariffs.”
Aside from trade news, currency traders are also looking ahead to Tuesday’s U.S. CPI report and any developments on potential sanctions against Russia.
“Look out for the announcement of any secondary sanctions on those countries buying Russian oil,” ING added. “A jump in energy is good news for the energy-independent U.S. (and the dollar) and negative for the big energy importers in Europe and Asia.”
Euro Slides to Lowest in Three Weeks
EUR/USD was down 0.1% to 1.1683, touching a three-week low earlier in the session following Trump’s EU tariff warning. European Commission President Ursula von der Leyen criticized the tariffs as “unfair and disruptive” but confirmed that the EU would maintain its suspension of countermeasures until early August as negotiations continue.
“Those waiting for better levels to buy EUR/USD could be rewarded for their patience,” said ING. “U.S.-EU trade negotiations look set to get noisier over the coming weeks, and baseline expectations that the EU secures a 10% tariff rate on most goods could be challenged.”
Sterling Slides on U.K. Economic Weakness
The pound fell as well, with GBP/USD down 0.2% to 1.3476, marking a two-week low. The move extended recent losses following disappointing U.K. economic data last week, showing that the economy shrank for the second consecutive month in May.
“Investors seem to be taking a dimmer view of sterling, presumably on the back of the fiscal straitjacket currently trapping U.K. Chancellor Rachel Reeves,” said ING.
Asian Markets Stay Quiet Amid Trade Tensions
In Asia, USD/JPY edged up 0.1% to 147.21, while USD/CNY was nearly unchanged at 7.1682. Traders remained cautious as they balanced Washington’s tariff announcements against encouraging Chinese trade figures.
China’s trade surplus for June exceeded expectations, driven by better-than-expected export growth. Mutual tariff reductions under the U.S.-China trade agreement helped boost outbound shipments, including rare earth metals.
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