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EUR/USD Rockets Higher As Dollar Weakens On Fiscal Policy Hopes
Tuesday, 1 July 2025 06:23 WIB | EUR/USD |EUR/USD

EUR/USD rose to a fresh yearly high of 1.1780 on Monday (01/07) as the Greenback continued to be hit by the prospect of a fiscal budget agreement in the United States (US) and expectations that the Trump administration continues to make progress on a trade deal with major trading partners. At the time of writing, the currency pair was trading at 1.1776, up 0.51%.

The sentiment remains positive as depicted by US equity indices posting a solid second quarter in 2025, trading at an all-time high. Therefore, the US Dollar (USD) is nearing a multi-year low amid expectations that the fiscal deficit will widen substantially, and market participants are pricing in more than 50 basis points (bps) of easing by the Federal Reserve (Fed), pushing the common currency to a four-year high.

News that the European Union (EU) will accept Trump's universal tariffs pushed EUR/USD higher. However, the EU wants the US to lower tariffs on key sectors including pharmaceuticals, alcohol, semiconductors and commercial aircraft.

Data in Europe revealed that German Retail Sales plunged. European Central Bank (ECB) policymakers appear concerned about economic growth and will continue to rely on data in setting their interest rate policy.

On Tuesday, Federal Reserve Chairman Jerome Powell will share a panel with ECB President Christine Lagarde, Bank of England (BoE) Governor Andrew Bailey and Bank of Japan (BoJ) Head Kazuo Ueda. (alg)

Source: FXstreet

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