The U.S. dollar surged this week, marking its strongest gain of the year, following the announcement of a new trade agreement between the United States and the European Union. The deal includes mutual tariff adjustments up to 15%, along with strategic cooperation on energy and defense spending. The U.S. is expected to boost exports of liquefied natural gas (LNG) and defense systems, while the EU gains access to key U.S. manufacturing sectors.
This accord has reassured investors about U.S. global trade leadership, especially as tensions with China remain elevated. The foreign exchange market responded immediately, with the U.S. dollar index climbing sharply against the euro, yen, and other major currencies. Investors are also watching the Federal Reserve meeting closely, where policymakers are expected to hold interest rates steady amid cooling inflation and strong labor market data.
Market analysts believe this agreement strengthens the U.S. dollar’s role as a safe haven currency in a volatile global environment and highlights the strategic realignment of Western trade and defense partnerships.