The EURUSD is sharply lower after the trade deal with the US (or the framework) was decided over the weekend. The GBPUSD is down but more modestly, with the EURGBP moving lower after it stretched to new highs on Friday and early today, before reversing lower (and tests its 100/200 hour MAs (see chart below).
The USDJPY is moving higher as the greenback rises after the weekend news. In the video above, I take a look at the technicals that are driving the major currency pairs – the EURUSD, USDJPY and GBPUSD from a technical perspective
President Trump and European Commission President Ursula von der Leyen reached a major U.S.–EU trade agreement on Sunday, averting a potential trade war days before the Aug. 1 deadline.
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Baseline tariff set at 15% on most EU goods, including autos, semiconductors, and pharmaceuticals.
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EU to purchase $750B in U.S. energy and invest $600B in the U.S.
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Zero-for-zero tariffs agreed for select products (aircraft parts, chemicals, semiconductors, some agriculture).
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Quota system for EU steel and aluminum exports—Trump’s 50% metal tariffs remain in place.
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Trump called it his biggest trade deal so far; EU is the U.S.’s largest regional trading partner.
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EU officials say the 15% rate keeps average tariffs close to current levels due to existing U.S. duties
The EU deal is one of the biggest to day and helps to provide market certainty amid a wave of tariff negotiations. However, some details remain ambiguous, including enforcement and sector-specific rules.
For your guide in 2024:
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U.S. goods imports from EU (2024): $605.66 billion
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Total U.S. goods imports (2024): $3.2956 trillion
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EU share of total U.S. goods imports: ~18.4%
The breakdown shows:
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Germany: $160.4B
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Ireland: $103.3B
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Italy: ~$75.8B
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France: ~$59.7B
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Other EU countries: ~$207B
EU trade chief Sefcovic emphasized that the newly established 0% tariff list with the U.S. is just the beginning, with room for further additions. He framed the deal as the start of a broader strategic partnership, stressing that cooperation with the U.S. is far preferable to engaging in a trade war.
U.S. Trade Representative Greer said the EU has agreed to adopt certain aspects of U.S. auto standards, marking progress in transatlantic trade talks. He noted continued work is needed on steel and digital services taxes. On China, Greer aims for a positive path forward but doesn’t expect major breakthroughs soon, emphasizing ongoing monitoring of existing agreements. There’s mutual interest in a Trump-Xi meeting, but the U.S. isn’t feeling pressured to strike more deals quickly, prioritizing quality over speed. Talks with India also require further negotiation.
ECB’s Kazimir signaled that no major economic developments currently justify action in September, emphasizing that only a clear deterioration in the labor market would prompt a shift. He dismissed concerns about a sustained inflation undershoot and noted the US-EU trade deal reduces uncertainty, though its inflation impact remains unclear. While he hasn’t ruled out a possible December cut, it would require significant negative data. Markets are pricing in a 65% chance of a December cut, but with easing likely complete and fiscal expansion underway, further rate cuts appear increasingly unlikely.
This week has only just begun as key earnings and economic data/central bank decisions – including the Fed decision on Wednesday – clutter the calendar. Below is a review of all that is scheduled:
In addition to the FOMC rate decision at 2 PM on Wedneday followed by the Fed Chair press conference, the US employment data will be released on Friday at 8:30 AM.
Also scheduled for release:
Today:
- Advanced trade balance for June estimate $-98.40 billion versus $-96.42 billion last month
Tuesday bloc:
- Australia CPI (9:30 PM ET on Tuesday night). Estimate 0.8% versus 0.9% last month. Year on year 2.1% versus 2.1% last month
Wednesday:
- ADP nonfarm payroll employment change. 8:15 AM ET. 75K vs -33K last month.
- Advance GDP 2Q: 8:30 AM ET. Estimate 2.5% versus -0.5% last quarter
- Bank of Canada rate decision. 9:45 AM ET. No change is expected at 2.75%
- FOMC rate decision. 2 PM ET. No change is expected at 4.5%
- Fed Chair press conference: 2:30 PM ET.
- Bank of Japan rate decision (variable) no change is expected
Thursday:
- BOJ press conference
- Canada GDP MOM. 8:30 AM ET. Estimate -0.1% versus -0.1% last month
- US Core PCE price index. 8:30 AM ET. Estimate +0.3% versus 0.2% last month
- US initial jobless claims. 8:30 AM ET. Estimate 220K vs 217K last month
Friday:
- US Non for payroll change. 8:30 AM ET. Estimate 103K vs 147K last month
- US unemployment rate 8:30 AM ET. Estimate 4.2% versus 4.1% last month.
- US average hourly earnings. 8:30 AM ET. Estimate 0.3% versus 0.2% last month.
- US ISM Manufacturing PMI. 10 AM ET. Estimate 49.5 versus 49.0 last month
As for earnings, four of the so-called Magnificent 7 will release with Meta, Microsoft, Apple, Amazon all scheduled to release. Other names include UnitedHealth, Boeing, Merck, Visa, Starbucks, MasterCard, Exxon and Chevron.
Below is a list of the key releases by day (and before or after the close).
Monday
After Close:
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Waste Management (WM)
Tuesday
Before Open:
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UnitedHealth Group (UNH)
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PayPal (PYPL)
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Boeing (BA)
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UPS
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Spotify (SPOT)
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Merck (MRK)
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Procter & Gamble (PG)
After Close:
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Visa (V)
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Starbucks (SBUX)
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Seagate (STX)
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Booking Holdings (BKNG)
Wednesday
Before Open:
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Altria (MO)
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Teva (TEVA)
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Kraft Heinz (KHC)
After Close:
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Meta Platforms (META)
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Microsoft (MSFT)
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Robinhood (HOOD)
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Qualcomm (QCOM)
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Ford (F)
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ARM Holdings (ARM)
Thursday
Before Open:
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CVS Health (CVS)
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Mastercard (MA)
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Bristol Myers Squibb (BMY)
After Close:
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Apple (AAPL)
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Amazon (AMZN)
Friday
Before Open:
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ExxonMobil (XOM)
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Chevron (CVX)
Looking at the US stock market in premarket trading equities are higher led by the S&P and NASDAQ. Recall Friday they closed at record levels:
- Dow industrial average up 30 points
- S&P up 14.86 points.
- NASDAQ index up 85.75 points
in the US debt market:
- 2-year yield 3.97%, +1.1 basis points
- 5-year yield 3.967%, +1.6 basis points
- 10 year yield 4.407%, +2.2 basis points
- 30 year yield 4.953%, +2.4 basis points
This article was written by Greg Michalowski at investinglive.com.
