Tariff Relief Fuels Dollar Buying—What’s the Impact on Euro and Yen?
The EU deal announced Sunday from Scotland slashed planned U.S. import tariffs on EU goods from 30% to 15%, providing near-term relief to exporters and markets.
The euro, initially buoyant during early Asia trade, reversed sharply to close 0.7% lower at $1.1653, its biggest single-day drop in 10 weeks. The dollar also strengthened against the yen, up 0.5% at 148.37, and pushed the British pound down 0.24% to $1.3413.
A pullback in safe-haven demand, seen in the 0.74% gain versus the Swiss franc, further confirmed the broader dollar bid.
Central Bank Meetings Loom Large—Is Yield Differential Returning to Focus?
While trade relief helped spark the DXY rally, focus is now turning to this week’s Federal Reserve and Bank of Japan meetings. Both central banks are widely expected to hold rates steady, but markets will parse post-meeting commentary for policy direction.
Yield differentials, long suppressed by policy uncertainty, may become more relevant again if the Fed signals rate stability while overseas dovishness persists. HSBC’s Paul Mackel noted that recent trade deals could reduce policy risk, giving more weight to traditional FX drivers such as relative interest rates.
U.S. Tech Earnings and Trump-Fed Tensions Add More Volatility Potential
Upcoming earnings from Apple, Microsoft, Amazon, and Meta could add fuel to dollar momentum if results draw flows back into U.S. assets. Equities with heavy index weightings often influence USD through global portfolio rebalancing.
