Dollar strengthens on US-EU Trade deal, easing global trade tensions.

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The dollar strengthened against major currencies on Monday following a framework trade agreement between the US and the EU, which reduced fears of a global trade war. US President Donald Trump and European Commission President Ursula von der Leyen announced the deal, which includes a 15% tariff on EU goods, half the rate Trump had threatened to impose starting August 1.

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“If you rewind back to early April or Liberation Day, the overarching theme has been selling US assets because of uncertainties due to the new trade regime,” said Eugene Epstein, head of structuring for North America at Moneycorp in New Jersey. “I would argue that what you’re seeing is some semblance of a return to normalcy.”

The dollar rose against the Japanese yen by 0.59% to 148.535 and against the Swiss franc by 1% to 0.80325 francs. Meanwhile, the euro fell 1.25% to $1.159125, reversing an initial knee-jerk rise in Asia trade

Anthi Tsouvali, multi-asset strategist at UBS Wealth, noted that the euro’s strength was unexpected, saying, “If you think about what we expected in the beginning of the year, no one really thought that the euro was going to be so strong. We all thought that, especially post Liberation Day, the dollar would remain strong.” Tsouvali added, “We continue to see the dollar weakening.”

The dollar’s rise comes as US stocks traded near record highs, with the Dow Jones Industrial Average falling 0.3%, the S&P 500 dipping 0.15%, and the Nasdaq Composite rising 0.14%. The dollar strengthened against the pound, which was 0.67% lower at $1.33545.

Investors are shifting their attention to corporate earnings and central bank meetings in the US and Japan, with both the Fed and the Bank of Japan expected to hold rates steady. Traders will watch subsequent comments to gauge the timing of the next moves and Trump’s reaction to the Fed’s decision. The 2-year note yield rose 1.5 basis points to 3.932%.

In the cryptocurrency market, bitcoin fell 0.52% to $118,205.38, and Ethereum declined 0.61% to $3,800.90

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