Dollar Weakens as Trade Progress Boosts Other Currencies
The US dollar index slipped toward 97 on Thursday, nearing a three-week low, as progress in trade talks with major partners lifted rival currencies. Reports indicated that the US and EU are moving closer to a deal, with discussions centered around a 15% baseline tariff on EU goods and possible exemptions.
Earlier this week, Japan agreed to a similar 15% tariff on its exports to the US, a reduction from the 25% previously threatened by President Donald Trump.
Additionally, Treasury Secretary Scott Bessent signaled that the current tariff truce with China is likely to be extended beyond its August 12 expiration, further improving risk sentiment.
These developments supported a broad rally in the euro, yen, and other risk-sensitive assets, putting pressure on the dollar. On the policy front, the Federal Reserve is expected to remain cautious about additional rate cuts, amid concerns that Trump's tariffs could stoke inflation.
Source: Trading Economics
