The euro rose in European trade on Monday against a basket of major rivals, moving in a positive zone against the dollar amid renewed negative pressures on the US currency due to mounting US-China trade tensions. 

Recent positive eurozone data and bullish remarks from ECB officials led to divisions among policymakers about the prospect of a rate cut in June, as traders await main inflation data for the eurozone tomorrow.

The Price

The EUR/USD rose 0.3% to $1.1382, with a session-low at $1.1345.

The euro fell 0.2% against the dollar on Friday following positive US data.

US Dollar

The dollar index fell 0.3% on Monday, resuming losses after a hiatus on Friday against a basket of major rivals.

The decline comes amid renewed inflationary pressures on the US currency amid concerns about economic recession due to mounting US-China trade tensions.

China responded to US accusations of violating the Geneva trade agreement, by also accusing Washington of violating the deal, in a sign of deteriorating conditions between the two biggest economies in the world.

Trade tensions resumed after a short hiatus last month, when both sides signed a deal to suspend most tariffs for 90 days in Geneva.

Then the Trump administration put new limits on chip and chemical exports to China, and cancelled Chinese students’ visas, triggering the ire of Beijing.

China’s commerce ministry warned that such measures contradict the spirit of the Geneva deal, but conversely, Beijing maintained strict control over exports of rare earth minerals.

European Rates

Recent eurozone data showed inflation rose past estimates in April, renewing pressures on ECB policymakers. 

ECB President Christine Lagarde said the euro could be a practical alternative to the dollar if governments managed to bolster the financial and security structures in the EU.

Now markets estimate a less than 50% likelihood for a 0.25% ECB rate cut in June.

The Japanese yen rose in Asian trade on Monday on track for the third profit in a row against the US dollar on haven demand amid mounting global and geopolitical tensions. 

Renewed US-China tensions threaten to tank the initial trade agreement reached in Switzerland, with increasing animosity between Russia and the west after Ukraine executed a complex attack that targeted Russian air bases. 

Recent Tokyo data showed increasing inflationary pressures on the Bank of Japan, which boosted the odds of a June interest rate hike by the Bank of Japan.

The Price

The USD/JPY price fell 0.55% to 143.32, with a session-high at 144.10.

The yen rose 0.1% on Friday against the greenback, following hot Tokyo inflation data.

Trade Tensions

China responded to US accusations of violating the Geneva trade agreement, by also accusing Washington of violating the deal, in a sign of deteriorating conditions between the two biggest economies in the world.

Trade tensions resumed after a short hiatus last month, when both sides signed a deal to suspend most tariffs for 90 days in Geneva.

Then the Trump administration put new limits on chip and chemical exports to China, and cancelled Chinese students’ visas, triggering the ire of Beijing.

China’s commerce ministry warned that such measures contradict the spirit of the Geneva deal, but conversely, Beijing maintained strict control over exports of rare earth minerals.

Geopolitical Tensions 

In Europe, Ukraine executed an unprecedented military operation inside Russia, targeting five strategic air bases and damaging over 40 military airplanes, including Tu-95, Tu-22M, and A-50 planes.

Ukraine estimates the operation destroyed nearly 34% of Russian strategic bombers, with losses amounting to $7 billion.

Russia is expected to respond with heavy retaliatory strikes, likely targeting strategic Ukrainian infrastructure, and maybe even targeting the decision-making centers inside Kiev with long-range missiles.

Japanese Rates

Earlier data showed consumer prices in Tokyo rose 3.6% y/y in May, the fastest pace since January 2023, and up from 3.4% in April.

Following the data, the odds of a BOJ 0.25% interest rate hike in June rose from 35% to 45%.

Bank of Japan Deputy Governor Shinichi Uchida said the bank will continue to raise interest rates if the economy recovers from the negative impact of US tariffs, however he still cautioned that the economic outlook remains highly uncertain.

Now traders await more Japanese data on inflation, unemployment, and wages to gather additional clues.

Most US stock indices closed down on Friday, with Wall Street marking stellar monthly gains overall, boosted by the trade agreement between the US and China, which removed most tariffs temporarily, although that deal is under scrutiny now.

Trump accused China of violating an agreement suspending reciprocal tariffs with the US, adding that he was “too nice” with Beijing.

The US trade representative raised even more concerns when talking about potentially expanding tariffs against China if needed.

Earlier US data showed personal consumption rose 2.5% y/y in April, slowing down from 2.6% in March.

The University of Michigan’s consumer confidence survey fell 24.5% in May from 69.1 in the same month of last year. 

At the close, Dow Jones rose 0.1% to 42,270 points, with a weekly profit of 1.6%, and a monthly profit of 2.3%.

S&P 500 fell 0.1% to 5911 points, with a weekly profit of 1.9%, and a monthly profit of 4%, the biggest since November 2023.

NASDAQ shed 0.3% to 19,113 points, with a weekly profit of 2%, and a monthly profit of 6.3%, also the best since November 2023.

Soybean futures fell on Thursday at the Chicago Exchange, amid concerns about the trade war and the stronger dollar. 

Weaker demand, and expectations of a strong harvest in the northern hemisphere maintained the outlook of oversupplies. 

The dollar index rose 0.1% as of 20:28 GMT to 99.3, with a session-high at 99.6, and a low at 99.1.

Trump accused China of violating an agreement suspending reciprocal tariffs with the US, adding that he was “too nice” with Beijing.

The US trade representative raised even more concerns when talking about potentially expanding tariffs against China if needed.

Earlier US data showed personal consumption rose 2.5% y/y in April, slowing down from 2.6% in March.

The University of Michigan’s consumer confidence survey fell 24.5% in May from 69.1 in the same month of last year. 

Corn

On trading, corn July futures fell 0.8% to $4.44 a bushel.

Soybeans 

Soybean July futures shed 0.9% to $10.41 a bushel.

Wheat

Wheat July futures fell less than 0.1% to $5.34 a bushel.