The euro jumped to a one-month high after Trump's stance on EU tariffs was reversed

The Zhitong Finance App learned that on Monday, the exchange rate of the euro against the US dollar hit a one-month high. Earlier, the EU requested time to “reach a good agreement,” and US President Donald Trump dropped the threat of imposing 50% tariffs on EU goods exported to the US from June 1.

Trump's policy reversal, as well as large-scale spending and tax cuts currently in the legislative process, left investors lacking interest in US assets, and the dollar continued to fall against many other currencies.

Ray Atelier, head of foreign exchange research at the National Bank of Australia, said, “'Selling off American assets', a theme that clearly dominated in April, is now resurfacing.”

“The market may think — and this is probably reasonable — that the tariff issue between the US and the EU will not end with a 50% tax rate in the end, but frankly speaking, no one can guess how it will end.”

The EUR/USD exchange rate once climbed 0.55% to 1.1418, the first time since April 29. As of press release, the EUR/USD exchange rate rose 0.16% to 1.1383 US dollars, with a cumulative increase of 10% since this year.

As market sentiment improved, the yen and Swiss franc, which are safe-haven currencies, weakened as a whole, but the exchange rate against the US dollar continued to appreciate.

The exchange rate of the US dollar against the yen once fell 0.24% to 142.23 yen, a new monthly low; the exchange rate against the Swiss franc fell slightly to 0.8193 Swiss franc, the low in two and a half weeks.

The US dollar index, which tracks the exchange rate of the US dollar against six other currencies, fell 0.15% to 98.93, continuing last week's 1.9% decline.

Trump announced on Sunday that he would postpone the implementation of EU tariffs until July 9. Earlier, European Commission President Ursula von der Leyen made a regular phone call with Trump requesting more time to reach an agreement. July 9 is the deadline for a 90-day moratorium after Trump announced the imposition of tariffs on the EU and most other trading partners on April 2.

The situation eased just two days after Trump issued a tariff threat, which is also a strong reminder that the shift in US trade policy could be more abrupt. However, it also made people believe that relevant agreements are possible and allayed concerns about the global economic recession.

Michael Fister, a monetary strategist at Commerzbank, said, “Given Trump's recent reversal of position, of course we will have to wait and see what happens next. It is possible to reach an agreement with the EU before July 9.”

“However, after one phone call, it is doubtful whether the underlying issue was actually solved. After Friday's announcement, one thing should be clear: the short respite from tariffs we are enjoying is only temporary.”

Perhaps in light of investors' concerns about the financial situation, Trump also said on Sunday that his large-scale spending and tax cuts could be “significantly” revised in the Senate.

According to data from the US Congressional Budget Office, the House version of the tax bill is expected to increase the federal government's $36.2 trillion debt by another $3.8 trillion over the next ten years.

Chris Weston, head of research at Patek, said: “It is clear from this coordinated bill... Trump and (Treasury Secretary Scott) Bessent have changed their strategy from fiscal conservatism and spending cuts to a radical policy stance that promotes growth.”

“The dollar has been on a downward trend for many years, and this view is quickly becoming the market consensus.”