Euro Slips, Dollar Gains After Trump Threatens 30% Tariffs on EU and Mexico

 Euro Slips, Dollar Gains After Trump Threatens 30% Tariffs on EU and Mexico

SINGAPORE, July 14 – The euro weakened to a three-week low early Monday, while the U.S. dollar saw modest gains following U.S. President Donald Trump's announcement of 30% tariffs on imports from the European Union and Mexico, set to begin on August 1.

Market reaction to the new tariffs was subdued, with most currencies holding steady. The euro later pared some losses and was last down 0.13% at $1.1676. The dollar also rose against the Mexican peso, gaining 0.28% to 18.6763.

Sterling slipped 0.15% to $1.3470, while the Japanese yen edged up slightly to 147.31 per dollar. The Australian and New Zealand dollars also declined, falling 0.12% and 0.37% respectively.

Cryptocurrencies, however, saw a rally. Bitcoin surged past the $120,000 level for the first time, rising 2.6% to $122,248.59, while Ether gained 2% to reach $3,052. Analysts attributed the jump to growing optimism over upcoming policy developments favorable to digital assets.

In response to the tariff threats, the EU and Mexico criticized the measures as unfair and disruptive. The EU stated it would maintain its suspension of countermeasures until early August, aiming to resolve the dispute through negotiations.

Despite the announcement, investors appeared largely unaffected. "It seems like financial markets have become insensitive to President Trump's tariff threats now, after so many of them in the past few months," said Carol Kong, currency strategist at Commonwealth Bank of Australia. "Markets may see the move as a tactic to extract trade concessions."

Adding to the tension, Trump repeated calls for Federal Reserve Chair Jerome Powell to step down, renewing pressure on the central bank to lower interest rates. Traders are now awaiting U.S. inflation data due Tuesday, which may offer clues on future rate moves. Current market pricing suggests more than 50 basis points of rate cuts by December.

In Asia, China's June trade data showed a recovery in both exports and imports, as exporters rushed to meet deadlines ahead of Trump’s tariff deadline. However, the figures had little impact on the yuan, which remained stable at around 7.17 per dollar.

Investors now turn their focus to China's upcoming GDP report, expected Tuesday, for further insight into the health of the world's second-largest economy. Analysts anticipate a slowdown in growth due to ongoing trade tensions and weak domestic demand.