The euro has strengthened, reaching its highest levels since the summer of 2021, buoyed by a generally weaker dollar and a new trade agreement between the EU and India. Geopolitical factors, including US trade tensions with multiple nations, are contributing to market caution, while investors await potential signals from the US Federal Reserve regarding future interest rate cuts and leadership changes.
- The euro held above $1.185, its strongest level since summer 2021.
- The EU-India trade agreement, covering a quarter of global GDP, establishes a free trade zone.
- The EU projects its exports to India could double by 2032 because of the new trade deal.
- The market anticipates the US Federal Reserve will maintain current rates and is watching for guidance on future rate cuts.
- President Trump threatened higher tariffs on South Korean goods, following similar warnings to Canada and Europe.
- EUR/USD reached a multi-year high in the 1.1930 region.
- President Trump decided to escalate trade tensions, this time with South Korea.
- The European Union is working harder to hedge against US tariff threats.
The euro’s recent performance suggests a positive outlook, primarily driven by successful trade negotiations and a less supportive environment for the dollar. The new trade partnerships enhance the currency’s attractiveness as the region looks to counter potential disruptions from elsewhere.