The euro maintained its position above $1.18 on Tuesday, holding near its highest point since September 2021, driven by a weakened dollar and the completion of a significant trade agreement between the EU and India. This landmark deal, which encompasses a quarter of the global GDP, establishes a substantial free trade zone for two billion people after nearly two decades of negotiations. Both Brussels and New Delhi anticipate that the agreement will unlock new market opportunities amidst U.S. tariffs and Chinese export restrictions. The EU is optimistic that its exports to India could potentially double by 2032.
Meanwhile, market participants are closely monitoring the U.S. Federal Reserve, which is anticipated to keep interest rates unchanged. Investors are also keenly observing for any hints regarding the timing of the next rate cut, amid speculation that a more dovish candidate might be appointed as the successor to Federal Reserve Chair Jerome Powell later this week.
Adding to the cautious sentiment are ongoing geopolitical and trade tensions, as U.S. President Donald Trump has threatened to impose higher tariffs on South Korean goods. This follows similar warnings issued to Canada and Europe earlier this month.