Jul 4, 2025
Dollar falls on trade uncertainty; euro poised for weekly increases.
The U.S. dollar fell on Friday, giving back some gains from the previous day as focus shifted to the July 9 deadline for U.S. trade agreements.
By 04:15 ET (08:15 GMT), the Dollar Index, which measures the dollar against six other currencies, was down 0.2% at 96.605, facing slight weekly losses despite a 0.4% rise on Thursday. U.S. markets were closed for Independence Day.
The dollar had increased on Thursday due to stronger-than-expected U.S. jobs data, postponing anticipated rate cuts by the Federal Reserve. However, these gains were short-lived as attention turned to ongoing trade negotiations and upcoming tariffs set to start on July 9.
Only three deals have been confirmed so far, with President Trump escalating tensions by announcing that many countries would receive letters specifying tariff rates, moving away from previous commitments to finalize individual agreements.
Analysts at ING noted, “The market appears to be preparing for more tariff-related volatility.” This is reflected in the FX options market, where EUR/USD volatility remains high for the next three weeks before declining for the remainder of the year.
In other news, the Republican-led House passed Trump's significant tax-and-spending bill, projected to increase the nation’s $36.2 trillion debt by $3.4 trillion, with Trump expected to sign it into law on Friday.
In Europe, EUR/USD rose 0.1% to 1.1774, aiming for a 0.5% weekly gain. Data showed German industrial orders fell 1.4% in May, much more than anticipated. The European Central Bank recently cut rates for the eighth time in a year, but plans to pause at the next meeting.
ING commented, “We are starting to hear more from the ECB regarding the euro's strength,” suggesting that a rapid EUR/USD rise past 1.20 would raise concerns.
GBP/USD increased 0.1% to 1.3664, though sterling was set for a negative week due to worries over Britain’s finances after the government backed off on welfare reforms.
In Asia, USD/JPY fell 0.4% to 144.36, after stronger-than-expected household spending data pointed to ongoing inflationary pressures. The yen had suffered sharp losses on Thursday.
USD/CNY dropped 0.1% to 7.1644 as Beijing announced new stimulus measures aimed at strengthening the country’s declining birth rate. Signs of improved U.S.-China trade relations after the U.S. lifted some chip export controls did little to support the yuan this week, alongside mixed PMI data.
China indicated it was reviewing export licenses for domestic rare earth companies in response to the U.S. lifting its chip export controls.
By 04:15 ET (08:15 GMT), the Dollar Index, which measures the dollar against six other currencies, was down 0.2% at 96.605, facing slight weekly losses despite a 0.4% rise on Thursday. U.S. markets were closed for Independence Day.
The dollar had increased on Thursday due to stronger-than-expected U.S. jobs data, postponing anticipated rate cuts by the Federal Reserve. However, these gains were short-lived as attention turned to ongoing trade negotiations and upcoming tariffs set to start on July 9.
Only three deals have been confirmed so far, with President Trump escalating tensions by announcing that many countries would receive letters specifying tariff rates, moving away from previous commitments to finalize individual agreements.
Analysts at ING noted, “The market appears to be preparing for more tariff-related volatility.” This is reflected in the FX options market, where EUR/USD volatility remains high for the next three weeks before declining for the remainder of the year.
In other news, the Republican-led House passed Trump's significant tax-and-spending bill, projected to increase the nation’s $36.2 trillion debt by $3.4 trillion, with Trump expected to sign it into law on Friday.
In Europe, EUR/USD rose 0.1% to 1.1774, aiming for a 0.5% weekly gain. Data showed German industrial orders fell 1.4% in May, much more than anticipated. The European Central Bank recently cut rates for the eighth time in a year, but plans to pause at the next meeting.
ING commented, “We are starting to hear more from the ECB regarding the euro's strength,” suggesting that a rapid EUR/USD rise past 1.20 would raise concerns.
GBP/USD increased 0.1% to 1.3664, though sterling was set for a negative week due to worries over Britain’s finances after the government backed off on welfare reforms.
In Asia, USD/JPY fell 0.4% to 144.36, after stronger-than-expected household spending data pointed to ongoing inflationary pressures. The yen had suffered sharp losses on Thursday.
USD/CNY dropped 0.1% to 7.1644 as Beijing announced new stimulus measures aimed at strengthening the country’s declining birth rate. Signs of improved U.S.-China trade relations after the U.S. lifted some chip export controls did little to support the yuan this week, alongside mixed PMI data.
China indicated it was reviewing export licenses for domestic rare earth companies in response to the U.S. lifting its chip export controls.