The EUR/USD pair remains subdued in early Asian trading on Tuesday, hovering near 1.1590 after dropping over 1% in the previous session. The decline comes amid renewed US Dollar (USD) strength, fueled by optimism surrounding a new trade agreement between the United States and the European Union.
Over the weekend, the US and EU reached a framework trade deal that introduces a 15% tariff on most European goods, effective August 1. The agreement marks the end of months of trade tensions, according to Bloomberg.
European Commission President Ursula von der Leyen confirmed that the EU has agreed not to retaliate with tariffs and instead committed to $600 billion in additional investments in the US, supplementing existing commitments.
Despite the deal, reactions across Europe have been mixed. France strongly criticized the agreement, calling it a “dark day” for the continent. Officials argued that the bloc had capitulated to US President Donald Trump by accepting an imbalanced deal. German Chancellor Friedrich Merz also expressed concern, warning that the new tariffs would inflict “significant” economic damage on Germany.
Meanwhile, European Central Bank (ECB) policymaker Peter Kazimir stated on Monday that current conditions do not warrant immediate action from the ECB in September. He emphasized the need for clear signs of labor market deterioration before considering a policy shift. Kazimir acknowledged that the US-EU deal reduced some economic uncertainty, but its inflationary impact remains uncertain.
The EUR/USD pair remains under pressure amid a stronger USD backdrop and growing sentiment that the trade deal primarily benefits the US economy. Traders now look ahead to upcoming US macroeconomic data and ECB signals for further directional cues.
