Trump announces trade deal with EU following months of negotiations
Investing.com - The U.S. dollar steadied Wednesday after a three-day decline, but the safe haven is still near its lowest level in two weeks with risk sentiment enhanced by the U.S.-Japan trade deal.
At 04:10 ET (08:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded largely unchanged at 97.110, just above its weakest level since July 10.
The index has lost well over 6% since the start of the global trade uncertainty prompted by U.S. President Donald Trump’s "Liberation Day" tariff announcement on April 2.
Dollar near recent lows
Trump’s announcement of a trade deal with Japan has boosted optimism that a full-blown global trade war can be avoided, bolstering hopes for more agreements ahead of an impending tariff deadline.
In a post on Truth Social, Trump said that a tariff rate of 15% was set on imports from Japan, down from the 25% rate that was expected to take effect from August 1, and added that the Asian nation will invest $550 billion in the United States.
The U.S. currency has been one of the biggest losers since Trump announced sweeping tariffs on trading partners on April 2, only to delay and suspend most of the duties as his administration sought bilateral trade deals.
Attention will now turn to the release of more U.S. housing data later in the session, ahead of next week’s Federal Reserve policy-setting meeting.
“The U.S. focus will be on the June existing home sales release, said analysts at ING, in a note. “Some are thinking that the housing sector will be the next shoe to drop in the U.S. slowdown.”
Euro slips slightly ahead of ECB
In Europe, EUR/USD fell 0.1% to 1.1745, with the single currency slipping slightly lower but remains near a four-year high it touched at the start of the month.
The single currency has surged over 13% this year as investors looked for alternatives to U.S. assets.
The European Central Bank is expected to hold rates steady on Thursday after eight consecutive rate cuts, with the prospect of hefty U.S. tariffs looming.
GBP/USD gained 0.2% to 1.3546, with the U.K. government having already signed a trade deal with the Trump administration.
Political uncertainty in Japan
Elsewhere, USD/JPY climbed 0.1% higher to 146.72, with the yen having handed back earlier gains prompted by the trade deal with the U.S. amid heightened political uncertainty.
Washington and Tokyo struck a broad trade deal that includes a 15% tariff on all imported Japanese goods, down from a previously proposed 25%.
However, any optimism generated by this deal has largely dissipated after the Mainichi newspaper reported that Japanese Prime Minister Shigeru Ishiba plans to formally announce his resignation by the end of August.
The decision comes amid growing internal criticism after his Liberal Democratic Party’s ruling coalition suffered a defeat in the upper house elections last weekend.
AUD/USD gained 0.5% to 0.6577 and USD/CNY slipped 0.2% to 7.1629, with the Japanese trade deal resulting in wider regional optimism.