Oil prices rose on Monday as investors reacted to a trade agreement between the United States and the European Union that spared most European goods from tariffs that had been set as high as 30%.

Brent crude futures climbed by 76 cents, or 1.1%, to $69.20 a barrel by 10:28 GMT, while US West Texas Intermediate (WTI) crude rose by 74 cents, or 1.1%, to $65.90 a barrel.

Tony Sycamore, market analyst at IG Markets, said: “The trade agreement between the US and the EU, along with the possibility of extending the tariff truce with China, is supporting global financial markets and oil prices.”

The deal, announced on Sunday, imposes a 15% tariff on most European goods instead of 30%. US President Donald Trump also stated that the agreement includes a pledge from the European Union to purchase $750 billion worth of American energy products over the coming years.

Senior officials from the United States and China are scheduled to meet in Stockholm on Monday in an effort to extend the trade truce ahead of the August 12 deadline.

Thomas Varga, analyst at PVM, said the deal between Washington and Brussels has “removed another layer of uncertainty,” adding that “the focus seems to be shifting back to fundamentals.” He noted that a strong dollar and reduced crude oil imports by India were weighing on prices.

On the supply side, the OPEC+ Joint Ministerial Monitoring Committee is expected to stick with its current production increase plans at its meeting today, according to four delegates who spoke to Reuters on July 25.

ING expects the coalition to complete the full restoration of the 2.2 million barrels per day of additional voluntary cuts by the end of September.

Meanwhile, Venezuela’s state oil company PDVSA is preparing to resume operations once Trump reinstates export and operational permits for its partners, according to company sources. Oil swaps that would allow Venezuelan crude to be exported are expected to resume if licenses are granted.

In the Middle East, Yemen’s Houthi group announced on Sunday that it would target vessels belonging to companies dealing with Israeli ports, regardless of the vessels’ nationality, in what they called the fourth phase of their military operations against Israel over the Gaza war.

The US dollar rose against most major currencies on Monday after the United States and the European Union reached a framework trade agreement, the latest in a series of moves aimed at averting a global trade war. Investors are also closely watching central bank meetings this week in the United States and Japan.

During a meeting in Scotland on Sunday, US President Donald Trump and European Commission President Ursula von der Leyen announced that the agreement includes a 15% tariff on European imports—half the 30% rate Trump had threatened to impose starting August 1.

The deal follows last week’s agreement between the US and Japan. Meanwhile, economic talks between senior US and Chinese officials are set to resume in Stockholm on Monday, aiming to extend the trade truce by three months and avoid higher tariffs.

The euro was last trading at $1.1693, down 0.4% on the day, after retreating from an earlier rally during Asian trading. Investors shifted focus to what easing global trade tensions might mean for the dollar’s performance.

Paul Mackel, Global Head of FX Research at HSBC, said, “The tone of US trade talks has become more constructive following deals with Japan and the EU. If more 'trade deals' are struck, that could reduce the uncertainty that has weighed on the dollar. In that scenario, other factors such as yield differentials may gain more influence.”

The dollar had weakened sharply earlier this year, particularly against the euro, amid fears that high tariffs would significantly damage the US economy, prompting investors to reduce their exposure to US assets.

Although yield spreads on government bonds are typically a key driver of currency movements, the euro is currently trading above levels implied by the yield gap between US and eurozone bonds.

The euro also edged lower against the Japanese yen and the British pound, after having hit a one-year high versus the yen and a two-year high versus the pound at the start of trading.

The dollar posted modest gains in other markets, rising 0.15% against the yen to 147.83 yen per dollar, while the pound slipped 0.13% to $1.3428.

As concerns over the economic fallout from tariffs subside, investor attention is turning to corporate earnings and this week’s monetary policy meetings at the Federal Reserve and the Bank of Japan.

While both central banks are expected to keep interest rates unchanged, markets will be watching accompanying statements closely to gauge the timing of future moves.

Investors are also awaiting Trump’s reaction to the Fed’s decision, as the US president continues to push for steep rate cuts. Last week, he came close to attempting to fire Fed Chair Jerome Powell, but pulled back at the last moment, citing concerns it could destabilize financial markets.

In the cryptocurrency market, Ethereum surged 1.7% to $3,940.25, marking its highest level since December 2024.

Gold prices declined in the European market on Monday, deepening losses for the fourth consecutive day and recording their lowest level in two weeks. The drop was driven by a slowdown in safe-haven demand amid prevailing positive sentiment in global markets, in addition to the rising US dollar in the foreign exchange market.

The United States and the European Union reached a major trade agreement ahead of the August 1 deadline, and intensive trade negotiations are set to begin later today between Washington and Beijing in the Swedish capital, Stockholm.

The Federal Reserve’s monetary policy meeting kicks off tomorrow, Tuesday, with decisions to be announced on Wednesday. Expectations point to interest rates remaining unchanged for the fourth consecutive meeting.

The Price

• Gold prices today: Gold declined by 0.4% to $3,323.84, down from the opening price of $3,337.62, after hitting a session high of $3,345.37.

• At Friday’s close, gold prices lost 0.9%, marking a third straight daily loss, under pressure from the rising US dollar.

• Over the past week, gold fell 0.4%, posting a second consecutive weekly loss due to correction and profit-taking from the five-week high of $3,438.94 per ounce.

Positive Trade Developments

The United States signed a framework trade agreement with the European Union on Sunday, imposing a 15% tariff on most European goods — half the rate previously threatened by Trump as of August 1. This move helped avert a broader trade war between the two allies, who together account for nearly one-third of global trade.

Senior US and Chinese negotiators are scheduled to meet in Stockholm on Monday to extend the current trade truce and prevent sharp tariff increases.

The US Dollar

The US Dollar Index rose by 0.5% on Monday, extending its gains for the third consecutive session, reflecting continued strength in the greenback against a basket of major and minor currencies.

This rally comes as concerns over a US economic slowdown eased following recent trade agreements with Japan and the EU, along with strong economic data suggesting the Federal Reserve may delay resuming interest rate cuts.

Federal Reserve

The Federal Reserve’s crucial monetary policy meeting begins tomorrow, Tuesday, with decisions expected on Wednesday. Projections point to no change in US interest rates — marking the fifth straight meeting with stable rates.

The policy statement and comments from Fed Chair Jerome Powell are expected to provide clear and strong signals regarding the future of interest rates in the United States for the remainder of the year.

US Interest Rates

• According to the CME Group’s FedWatch Tool: The probability of a 25 basis point rate cut at the July meeting is currently priced at 3%, while the probability of holding rates steady is at 97%.

• The probability of a 25 basis point rate cut in September is currently priced at 62%, with a 38% chance of rates remaining unchanged.

Gold Outlook

• Reliance Securities senior analyst Jigar Trivedi said the agreement eased transatlantic trade tensions, putting pressure on gold.

• Trivedi added: In the short term, we do not expect significant or sharp fluctuations in gold prices, as investor focus shifts to a pivotal week for US monetary policy and economic data.

SPDR Fund

Gold holdings at the SPDR Gold Trust — the world’s largest gold-backed ETF — remained unchanged on Friday, keeping total holdings at 957.09 metric tons, the highest level since June 23.

The euro rose in the European market on Monday at the start of the week’s trading against a basket of global currencies, resuming its gains that had stalled for two days against the US dollar, and once again approaching a two-week high, supported by the trade agreement between the European Union and the United States.

Following a hawkish meeting by the European Central Bank last week, expectations for a rate cut in September have declined. To reprice those expectations, investors are now awaiting the release of several key economic indicators from Europe — especially July inflation data.

The Price

• EUR/USD today: The euro rose against the dollar by 0.25% to $1.1770, up from Friday’s closing price of $1.1741, and recorded the lowest level during today’s session at $1.1748.

• On Friday, the euro ended the session down by less than 0.1% against the dollar, marking a second consecutive daily loss due to continued correction and profit-taking from the two-week high at $1.1775.

• Last week, the euro gained 1.0% against the dollar, posting its first weekly gain in the past three weeks, supported by the European Central Bank’s monetary policy meeting.

Trade Agreement Between the EU and the US

During their meeting in Scotland on Sunday, US President Donald Trump and European Commission President Ursula von der Leyen announced a new trade deal that includes the following:

• The agreement imposes US tariffs on imports from Europe — including cars, pharmaceuticals, and semiconductors — at a rate of 15% starting August 1.

• A selected group of American goods will be fully exempt from European tariffs under a “no-reciprocity” framework, including: aircraft parts, semiconductor equipment, some generic pharmaceuticals, chemicals, and strategic agricultural products.

• Tariffs on steel and aluminum will remain at 50% for now, with both sides agreeing on the potential to replace them later with a quota system.

• The EU committed to injecting up to $600 billion in investments into the US economy during Trump’s second term.

• The EU also committed to purchasing about $750 billion in US energy products — including liquefied natural gas and nuclear coal — over three years.

• Trump stated that the agreement aims to reduce the US trade deficit with the EU, which reached $235.6 billion in 2024.

• Von der Leyen described the deal as providing “stability and predictability” for both sides, with a focus on “rebalancing” the trade relationship.

European Interest Rates

• Last week, the European Central Bank kept its main interest rates unchanged at 2.15% — the lowest level since October 2022 — after having cut rates in the previous meeting for the seventh time in a row.

• The ECB preferred to pause its monetary easing in anticipation of clarity regarding future US trade relations.

• ECB President Christine Lagarde said after the monetary policy meeting: “We are in a waiting mode.” She added that the eurozone economy has shown resilience despite global economic uncertainty.

• According to Reuters sources, a clear majority in the ECB meeting expressed preference for keeping interest rates unchanged in September, marking a second consecutive meeting with this stance.

• Money market pricing for a 25-basis-point ECB rate cut in September has declined from 50% to below 30%.

• To reprice those expectations, investors in the coming period will closely monitor various economic indicators from Europe, in addition to statements by ECB officials.