Euro Slips, Dollar Gains as Trump Tariff Threats Rattle Markets; Bitcoin Tops $120K
The euro fell to its lowest level in three weeks on Monday, while the U.S. dollar edged higher after President Donald Trump threatened to slap 30% tariffs on imports from Mexico and the European Union starting August 1.
Cryptocurrency markets saw a strong rally, with Bitcoin climbing to a new all-time high above $120,000 as investors anticipated favorable regulatory developments. The leading digital currency was last up 2.6% at $122,248.59, while Ether rose 2% to $3,052.
Trump’s tariff threats came in letters shared on his Truth Social account, addressed to European Commission President Ursula von der Leyen and Mexican President Claudia Sheinbaum. Both Mexico and the EU denounced the move as disruptive, though the EU said it would hold off on retaliatory measures until early August while pursuing talks.
Currency market reactions were muted during Asian hours, although the euro briefly touched a three-week low before paring losses. It was last down 0.13% at $1.1676. The dollar gained 0.28% to trade at 18.6763 pesos, while sterling eased 0.15% to $1.3470. The yen was slightly firmer at 147.31 per dollar.
Market participants appeared to take the latest tariff escalation in stride, having grown accustomed to Trump’s repeated trade threats.
“Markets seem numb to Trump’s tariff moves now,” said Carol Kong, currency strategist at Commonwealth Bank of Australia. “This may be seen as just another negotiation tactic.”
In other currency moves, the Australian dollar fell 0.12% to $0.6566, and the New Zealand dollar declined 0.37% to $0.5987.
Separately, Trump again criticized Federal Reserve Chair Jerome Powell over the weekend, saying it would be “great” if he resigned—renewing pressure on the central bank to cut interest rates.
Traders will be watching Tuesday’s U.S. CPI data for June to assess inflation trends and the Fed’s next steps. Markets currently price in around 50 basis points of rate cuts by year-end.
Meanwhile, China’s trade data showed stronger-than-expected exports and a rebound in imports for June, boosted by companies hurrying to ship goods amid a fragile trade ceasefire with the U.S. Still, the yuan remained mostly flat, with the onshore rate at 7.1706 and the offshore rate nudging up to 7.1710 per dollar.
Investors are also looking ahead to China’s second-quarter GDP release on Tuesday, which is expected to show a slowdown in growth as trade tensions and deflationary pressures weigh on the economy.
