Euro Gains as EU, US Move to Next Step on Trade Pact

Euro Gains as EU, US Move to Next Step on Trade Pact

Euro gains 0.02% to $1.1651 in the forex market as the EU and US move to the next step in implementing the trade deal. The euro rally was also boosted by solid flash PMI data released by S&P Global on Thursday, showing improved business activity in the Eurozone.

Investors opened positions in euro currency following news that the US and the European Union took the next steps to formalize their trade pact, detailing plans that could reduce tariffs on European automobiles.

The joint statement issued Thursday advances the preliminary deal announced a month ago by including specific benchmarks for the EU to secure its promised sectoral tariff discounts on cars, pharmaceuticals, and semiconductors, as well as new commitments to cooperation.

The euro gained 0.02% to $1.1651 mark, though it has still been in a narrow range since the start of the week and has held most of its rally this year as markets continue to gauge how the Eurozone and US economies are adapting to fiscal and monetary policy shifts.

The euro area PMI data earlier was solid, as businesses saw new orders increase in August for the first time since May 2024, helping overall activity expand at the fastest pace in 15 months despite persistent weakness in exports, a survey said on Thursday.

The Flash Eurozone Composite Purchasing Managers’ Index, compiled by S&P Global, rose to 51.1 in August from 50.9 in July, marking the third consecutive monthly improvement and the highest reading since May 2024.

The PMI data suggested that the Euro Area underwent a broad expansion in activity during August. The survey showed that both new orders and price gauges rose in the period, strengthening the case for fewer rate cuts by the ECB.

EUR/USD is becalmed while optimism over a potential ceasefire/peace deal in Ukraine is now fading. EUR/CHF dropped back to 0.9370 in the forex market on Thursday after a sharp rally in the week.

Oil and natural gas have gone bid over the last 24 hours, according to ING note, which analysts think is a mild euro negative.

“We may see another tight 1.1620-1.1670 trading range in EUR/USD today, with the biggest chance of a breakout remaining Powell’s speech tomorrow,” ING analyst Chris Turner said in a note.

The developments supported the currency after the EU Commission struck a trade deal with the US that prevented the 30% tariff rates by Trump, settling for the base level of 15%.

In 2025, the euro rallied 11% against the dollar as EU nations signaled they will increase expenditure to stimulate industry, infrastructure, and defense. #Euro Gains as EU, US Move to Next Step on Trade Pact Microsoft Takes Action Against Potential Cyber Threats, Restricts Chinese Access