By Rocky Swift
TOKYO (Reuters) -The euro edged higher on Monday after news of a framework trade pact stuck between the United States and the European Union, the latest in a flurry of deals to avert a global trade war, while central bank meetings in the US and Japan also come into focus.
Meeting in Scotland on Sunday, U.S. President Donald Trump and European Commission President Ursula von der Leyen said the deal provided for an import tariff of 15% on EU goods, half the rate Trump had threatened from August 1.
The euro stood at $1.1753, up 0.1% after initially rising 0.3%. The common currency strengthened 0.2% to 173.64 yen, climbing for a fifth straight session to a fresh one-year high.
As concerns subside about the economic fallout from punishing tariffs, investor attention is shifting to corporate earnings and central bank meetings in the United States and Japan in the next few days.
“It could be a positive week, just purely from the fact that now we know the rules of the game, if you like,” Rodrigo Catril, senior currency strategist at National Australia Bank, said on a bank podcast.
“Now that there is more clarity, you would think that not only in the United States, but around the globe, there will be a little bit more willingness to look at investment, to look at expansions, and to look at where the opportunities are.”
Still, a detailed trade deal between the two biggest economies remains elusive, though senior negotiators from the United States and China are set to meet in Stockholm on Monday.
The dollar was little changed at 147.65 yen. The dollar index, which tracks the greenback against major peers, was flat at 97.582.
Both the Fed and the Bank of Japan are expected to hold rates steady at policy meetings this week, but traders will watch subsequent comments to gauge the timing of the next moves.
Trump said the EU planned to invest about $600 billion in the United States and dramatically step up purchases of American energy and military equipment.
The pact is similar to one forged with Tokyo negotiators last week for Japan to invest some $550 billion in the United States and a 15% tariff imposed on its cars and other imports.
Many in Europe will still see the baseline 15% tariff as too high, versus initial the bloc’s hopes of a zero-for-zero tariff deal.
The deal’s investment provision will draw capital flows out of Europe, strengthening the dollar overall against the euro, said Shoki Omori, chief desk strategist at Mizuho Securities.
“Taken together, weaker relative growth prospects and a deteriorating balance of payments argue for a gradual depreciation of EUR/USD once the initial relief fades, notwithstanding the overnight uptick,” he said.
China faces an August 12 deadline for a durable trade pact with the United States.
The two are expected to extend their tariff truce by three more months at the Stockholm talks, the South China Morning Post newspaper said on Sunday, citing people familiar with the matter.
Shares and other risk-sensitive assets were supported ahead of a packed week of corporate results.
Quarterly results are due in coming days from Apple, Microsoft, Amazon and Facebook parent Meta Platforms META.O, four of the “Magnificent Seven,” whose stocks heavily influence benchmark indexes.
In cryptocurrencies, ethereum ETH= jumped 1.5% and reached as high as $3,905.79, the most since December 2024.
The U.S. dollar advanced on Friday, bolstered by solid economic data that suggested the Federal Reserve could take its time in resuming interest rate cuts.
Sterling traded at $1.3443, nearly unchanged. The Australian dollar fetched $0.6568, while New Zealand’s kiwi dollar was at $0.6014, both little changed.
(Reporting by Rocky Swift; Additional reporting by Kevin Buckland; Editing by Jacqueline Wong and Clarence Fernandez)
