The uncertainty driving EURUSD gains (+0.25%) is further intensified by inconsistent messaging from the U.S. administration.
U.S. Secretary of Commerce Howard Lutnick emphasized on Sunday that the tariffs will unconditionally take effect on August 1. On the other hand, U.S. Treasury Secretary Scott Bessent, when asked about the deadline, responded that “the quality of trade deals is more important, not timing.” While Lutnick does not rule out further negotiations after the tariffs are implemented, Bessent’s comments somewhat undermine the firmness of the current deadline.
On the EU side, there is still a prevailing willingness to reach a deal, but Trump’s hardline rhetoric and plans to impose tariffs of 15–30% are driving discussions around new retaliatory measures. The initial round of retaliatory tariffs on U.S. goods, worth a total of €21 billion, has been frozen until August 6, and the European Commission is reportedly preparing a second package worth an additional €72 billion. Moreover, the introduction of the so-called Anti-Coercion Instrument (ACI) would allow the European Commission to impose unilateral tariffs without prior approval from member states.
The ambiguity surrounding the final negotiation deadline and the risk of a full-scale trade war have reintroduced a high level of uncertainty — a key factor behind EURUSD’s recent gains. According to data from the European Council, trade between the EU and the U.S. reached €1.68 trillion in 2024, the highest among all bilateral relationships. A full-scale trade war would therefore quickly impact sentiment and consumer purchasing power.
EURUSD extentended gains by a bullish 0.1% during the Scott Bessent's interview. Source: xStation5
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