The euro climbed to a one-month peak against the U.S. dollar on Monday after President Donald Trump postponed plans to impose 50% tariffs on EU imports starting June 1. The delay came as the European Union requested more time to negotiate a mutually beneficial agreement.
The U.S. dollar continued its broad retreat amid concerns over Trump’s policy flip-flops and the recently passed tax and spending legislation, leading investors to shift capital away from American assets.
“We’re seeing a return of the ‘Sell America’ sentiment that dominated markets back in April,” said Ray Attrill, head of FX strategy at National Australia Bank. “Markets seem to believe — perhaps rightly — that tariffs won’t end up at 50%, but the path to resolution remains highly uncertain.”
The euro rose as much as 0.55%, reaching $1.1418 — its highest level since April 29 — and was last trading at $1.1375, up 0.17% on the day and 10% higher year-to-date. Much of the dollar’s recent weakness has translated into strength for the euro, as investors diversify into non-U.S. markets.
European Central Bank President Christine Lagarde said on Monday that the euro could become a stronger global reserve currency — if EU member states work to enhance the region’s financial and security frameworks. “These structural shifts open the door for a ‘global euro moment,’” Lagarde said in Berlin. “But influence must be earned, not assumed.”
The British pound also benefited, gaining 0.39% to its strongest level since February 2022 and last trading at $1.356, up 0.15%.
Meanwhile, traditional safe-haven currencies lost ground amid improving market sentiment. The dollar was up 0.2% against the yen at 142.84 and remained flat against the Swiss franc at 0.821.
Trump’s decision to extend the EU tariff deadline to July 9 followed a phone call with European Commission President Ursula von der Leyen, who requested more time to finalize a trade deal. That date marks the end of a 90-day tariff pause initially declared by Trump on April 2.
While markets welcomed the reprieve, analysts noted the unpredictability of U.S. trade policy. “After Trump’s latest pivot, we’ll have to wait and see if a deal is reached by July 9,” said Commerzbank strategist Michael Pfister. “But what’s really changed after one phone call? This delay may just be a temporary breather.”
Trump also hinted at major revisions to the House-passed tax and spending bill, likely to be made in the Senate. The current version is projected by the Congressional Budget Office to add roughly $3.8 trillion to the national debt over the next decade.
Chris Weston of Pepperstone said this marked a clear shift in Trump’s strategy: “It’s evident that Trump and Treasury Secretary Bessent have pivoted from fiscal restraint to a pro-growth approach.” He added, “There’s growing consensus that the U.S. dollar is headed for a long-term decline.”
