The EUR/USD dropped more than 1% on Monday as investors bought the Dollar on news that the United States (US) and the European Union (EU) had reached a trade agreement, similar to the one inked by Japan. The pair trades at 1.1590 after reaching a high of 1.1771.

Wall Street ended Monday's session with gains as investors seemed confident that the US would reach additional deals throughout the week. Nevertheless, the August 1 deadline approaches, and Washington remains unable to reach agreements so far with two of its three largest partners: Canada and Mexico.

Aside from this, the US economic docket would be packed in the current week. The Federal Open Market Committee (FOMC) is expected to keep interest rates unchanged at its meeting on July 29–30. Eyes will be on the Fed Chair Jerome Powell as market participants look for cues on when the central bank will resume its easing cycle.

Besides this, further US economic data is awaited. The release of the Fed's preferred inflation gauge, the Core PCE Price Index for June, along with jobs and growth data, and the ISM Manufacturing PMI, is expected to provide insight into the current state of the economy.

Across the pond, the European Central Bank (ECB) held rates and adopted a meeting-by-meeting approach amid a split division between doves and hawks in the Governing Council.

The EU economic docket will feature Retail Sales data for Germany, growth figures for Spain, Italy, Germany and the EU. Furthermore, traders await the release of HCOB Manufacturing PMIs for Spain, Italy, Germany, and the bloc, jobs data, and inflation figures in Germany, and the EU.

Source: fxstreet