EUR/USD started the week on a positive note but pared some of its earlier gains after hitting a four-week high of 1.1420, sponsored by US President Donald Trump's reversal of his decision to impose tariffs on the European Union (EU) on June 1. At the time of writing, the major was trading at 1.1380, up 0.20%.

Last week, late on Friday, Trump threatened to impose 50% tariffs on EU goods on June 1, as negotiations with the bloc were not going as expected. This triggered a rally in EUR/USD, which ended at a two-day high of 1.1375. However, a phone call between EU Commission President Ursula von der Leyen and Trump on Sunday gave both sides time to reach a deal by the July 9 deadline.

The greenback's decline has benefited the euro, which European Central Bank (ECB) President Christine Lagarde said could become a viable alternative to the US dollar (USD) as the world's reserve currency. However, he said this could happen if governments strengthen the bloc's financial and security architecture.

The US Dollar Index (DXY), which tracks the performance of the American currency against a basket of six other currencies, fell 0.10%. However, it held steady at 99.00 amid subdued trading conditions in the wake of the US Memorial Day holiday.

Minneapolis Federal Reserve (Fed) President Neel Kashkari said uncertainty was a major concern for the Fed and US businesses. He said the September meeting was open to "anything," adding that the US central bank was in wait-and-see mode. He added that the rate shock was stagflationary in nature. (alg)

Source: FXstreet