The euro rose in European markets on Friday against a basket of major currencies, extending its recovery for a second consecutive session after hitting a two-month low versus the US dollar. The gains were driven by dip-buying at lower levels.
This rebound comes ahead of the release of key eurozone inflation data for July, which is expected to shed more light on whether the European Central Bank (ECB) will raise interest rates in September.
Despite the current uptick, the single European currency remains on track for its steepest weekly loss since 2022 due to strong opposition from France and Germany against the recent US–EU trade agreement.
Price Overview
• EUR/USD rose by 0.15% to $1.1429, up from the day’s opening price of $1.1412, after hitting an intraday low of $1.1405.
• On Thursday, the euro gained 0.1% — its first daily gain in six sessions — recovering from a two-month low of $1.1400.
• Over the month of July, the euro fell 3.2% against the dollar, marking its first monthly loss since December 2024. The decline was driven by profit-taking from the 4-year high at $1.1830, along with fears that the new US–EU trade deal could spark an economic slowdown in the eurozone.
ECB Interest Rate Outlook
• The ECB kept its key interest rates unchanged at 2.15% last week — the lowest level since October 2022 — following seven consecutive rate cuts.
• The bank opted to pause its monetary easing cycle, awaiting more clarity on future US–EU trade relations.
• ECB President Christine Lagarde stated after the meeting: “We are in a wait-and-see mode,” and added that the eurozone economy has shown resilience despite global uncertainties.
• According to Reuters sources, a clear majority of ECB members preferred to keep rates unchanged at the upcoming September meeting — which would mark a second consecutive pause.
• On Thursday, German inflation figures came in higher than expected for July, potentially signaling renewed inflationary pressures that could influence ECB policy.
• Current money market pricing suggests less than a 30% chance of a 25 basis point rate cut by the ECB in September.
Eurozone Inflation Data
To reassess the policy outlook, investors are now awaiting July’s inflation figures, due at 10:00 GMT.
Market expectations are for headline annual CPI to slow to 1.9% in July from 2.0% in June, while core CPI is expected to remain steady at 2.3%.
Euro Outlook
• At Economies.com, we expect that if today’s inflation figures exceed market forecasts, the odds of a September rate cut by the ECB will fall further, potentially boosting euro exchange rates in the forex market.
Weekly Performance
So far this week, the euro is down approximately 2.65% against the US dollar, on track for its third weekly loss this month and the sharpest weekly drop since September 2022.
US–EU Trade Agreement
At 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:
• A 15% US tariff on European imports — including cars, pharmaceuticals, and semiconductors — starting August 1.
• A selected group of US goods will be fully exempt from EU tariffs under a “no quid pro quo” framework, including aircraft parts, semiconductor tools, some generic drugs, chemicals, and strategic agricultural products.
• Steel and aluminum tariffs will remain at 50% for now, with potential future replacement by a quota system.
• The EU committed to investing up to $600 billion in the US economy during Trump’s second term.
• The EU also pledged to purchase $750 billion in US energy products — including LNG and nuclear coal — over the next three years.
• Trump stated that the deal aims to reduce the US trade deficit with the EU, which reached $235.6 billion in 2024.
• Von der Leyen described the agreement as bringing “stability and predictability” to both sides and emphasized the goal of “rebalancing” trade relations.
European Reactions
On Monday, France labeled the trade agreement a “black day” for Europe, accusing the EU of caving to Trump in an unbalanced deal.
German Chancellor Friedrich Merz warned that the tariffs would cause “severe” damage to the German economy.
Most major cryptocurrencies declined on Thursday amid weakening risk appetite in financial markets, as the deadline set by President Donald Trump to finalize new trade agreements draws near.
US government data revealed that the core Personal Consumption Expenditures (PCE) price index — the Federal Reserve’s preferred inflation gauge — remained stable at 2.8% year-over-year in June.
Additional data showed that the US Employment Cost Index rose by 0.9% in the second quarter, surpassing expectations of a 0.8% increase.
Meanwhile, initial jobless claims rose by only 1,000 to 218,000 in the week ending July 26, compared to an unrevised 217,000 the previous week. Analysts had expected a rise to 222,000.
Investors are now awaiting Friday’s nonfarm payrolls report for further clarity on the Federal Reserve’s monetary policy outlook.
The market is also closely monitoring the August 1 deadline set by President Trump to conclude trade negotiations before new tariffs are imposed.
Earlier today, President Trump announced an agreement with Mexican President Claudia Sheinbaum to extend the trade negotiation deadline by an additional 90 days, citing the complexity of ongoing discussions between the two countries.
On Wednesday, Trump issued a series of tariff-related decisions targeting copper imports and goods from Brazil and South Korea, just ahead of the August 1 deadline for raising US tariffs.
Ethereum
As of 21:08 GMT on CoinMarketCap, Ethereum (ETH) was down 1.3% at $3,725.8.
Aluminum continues to perform strongly despite global economic shifts and regional extraction and refining challenges.
On July 25, aluminum prices on the London Metal Exchange climbed to a four-month high, closing the week at $2,656.5 and $2,657 per ton—an increase of $10.5 or 0.39%. According to reports, this rise was mainly driven by renewed optimism about Chinese demand, along with mounting pressure from global supply constraints.
On the same day, the three-month bid/ask prices rose by $7.5 per ton or 0.28%, reaching $2,655.5 and $2,656 per ton, respectively. In the following week, spot aluminum prices were recorded at $2,635.85 per metric ton, a slight pullback from the recent peak. Nonetheless, prices remain relatively elevated due to a combination of supply constraints and renewed demand from infrastructure projects in major economies.
Key Drivers of Price Movements
According to market observers, the current rally in aluminum prices is attributed to several factors, led by China’s production cap policies. Although China is the world’s largest aluminum producer, it is nearing its annual ceiling of 45 million metric tons—a policy aimed at curbing carbon emissions. This has led to expectations of reduced output in the second half of the year.
Rising demand from fast-growing sectors such as electric vehicles and renewable energy is also a key stabilizing force. Meanwhile, the European Union is ramping up investments in defense manufacturing, boosting demand for industrial metals like aluminum. Continued sanctions on Russia, a major aluminum exporter, have further constrained supply to European markets.
Other contributing factors include:
- Rising energy costs, as aluminum smelting is highly electricity-intensive.
- Trade disruptions, including escalating tariffs that are reshaping global aluminum flows.
- Supply chain volatility and increased demand from infrastructure projects.
Impact of Tariff Policies on Producers
In North America, tariff policies—especially under Section 232—continue to reshape the dynamics of the U.S. aluminum sector. Reports indicate that while domestic production remains strong, supply is increasingly supported by imports, particularly from Canada and Middle Eastern countries.
The industry was jolted in June when the U.S. doubled Section 232 tariffs to 50%, triggering major cost shifts and forcing producers to restructure supply strategies. Analysts note that producers have managed to adapt quickly despite the pressure.
For instance, Alcoa, one of the producers affected by the higher tariffs, has redirected Canadian exports to Europe and Asia while divesting non-core assets. Meanwhile, Rio Tinto, heavily reliant on Canadian exports to the U.S., incurred $321 million in tariff costs during the first half of the year. Approximately 723,000 tons of aluminum were exported to the U.S., significantly increasing cost burdens.
Outlook for the Aluminum Market
Industry leaders warn that prolonged trade tensions could dampen global aluminum consumption and curb sector growth. While some companies benefit from short-term regional supply shortages, many are preparing for deeper structural shifts should tariffs persist. Others are actively lobbying for exemptions.
Still, there are positive indicators supporting the market in the near term. Beijing has announced a ¥1.2 trillion hydroelectric dam project, signaling government intent to stimulate the economy through infrastructure investment. The project is expected to boost aluminum demand in construction, energy, and transportation sectors.
However, strict energy consumption policies in China—particularly in provinces like Yunnan and Inner Mongolia—have reduced output, further tightening global supply and increasing price volatility.
Amid these disruptions, India is emerging as a new growth market. With abundant bauxite reserves and an expanding downstream industry, India’s aluminum sector continues to gain momentum. Analysts forecast sharp increases in domestic demand over the coming years, driven by infrastructure development and rising activity in the transport sector.