The euro declined in the European market on Friday against a basket of global currencies, extending its losses for a third consecutive day against the U.S. dollar and nearing a two-week low, putting it on track for a weekly loss. The decline comes amid expectations that the European Union will receive a formal U.S. tariff letter later today.

Recent core inflation data from Europe has increased uncertainty around the likelihood of a European rate cut in July, as investors await further key economic indicators from the eurozone.

The Price

- EUR/USD today: The euro fell 0.3% to $1.1664, down from the opening price of $1.1699, after hitting a session high of $1.1707.

- The euro ended Thursday down roughly 0.2% against the dollar, its second straight daily loss, after touching a two-week low at $1.1662.

Weekly Performance

Over the course of the week, which officially concludes at Friday’s settlement, the euro is down about 0.9% against the U.S. dollar. This puts the common currency on track for its first weekly loss in three weeks, driven by profit-taking after reaching a four-year high of $1.1830.

U.S. Dollar

The U.S. dollar index rose 0.35% on Friday, extending gains for a second session and approaching a two-week high at 97.92 points, reflecting continued strength in the greenback against a basket of major and minor currencies.

The dollar’s rise comes amid mounting signs of disruption in global trade, after President Donald Trump announced additional tariffs. He said he intends to impose blanket tariffs of 15% or 20% on most of America’s trading partners.

Trump also confirmed a 35% tariff on goods imported from Canada. In a message posted on Truth Social, he informed Canadian Prime Minister Mark Carney that the new tariffs would take effect on August 1 and could increase further if Canada retaliates.

Potential Tariffs on the European Union

Trump stated on Thursday that the European Union may receive a formal tariff letter by Friday, casting fresh doubt over the progress of trade talks between Washington and Brussels.

Earlier this week, European sources familiar with the matter told Reuters that the EU might not receive a tariff letter and could potentially be granted exemptions from the 10% U.S. base tariff.

European Interest Rates

- The eurozone’s headline consumer price index rose 2.0% year-on-year in June, in line with market expectations, after a 1.9% increase in May.

- According to Reuters sources, a clear majority at the latest European Central Bank meeting favored keeping interest rates unchanged in July, with some members even calling for a longer pause.

- Current money market pricing suggests a 30% probability of a 25-basis-point rate cut by the ECB in July.

- To reprice those odds, investors will be closely watching upcoming economic data from across the eurozone, as well as remarks from ECB policymakers.

The Japanese yen declined in Asian markets on Friday, resuming its losses after a two-day pause against the US dollar, edging closer once again to its lowest level in two weeks. The currency is now on track for its largest weekly loss in 2025, amid escalating chaos in global trade as Donald Trump announced further tariffs.

Despite rising expectations of a rate hike by the Bank of Japan at its late-July meeting, markets remain focused on upcoming key economic data from Tokyo, including figures on inflation, wages, and unemployment in the world's third-largest economy.

The Price

- Yen exchange rate today: The dollar rose by 0.55% against the yen to ¥147.04, up from the opening rate of ¥146.23, after hitting a low of ¥146.13.

- On Thursday, the yen posted a marginal gain of less than 0.1% against the dollar, marking its second consecutive daily gain as part of a rebound from its two-week low at ¥147.18.

Weekly Performance

Over the course of this week—which officially concludes at Friday’s settlement—the yen is currently down about 1.75% against the US dollar, putting it on track for its steepest weekly decline of 2025.

Trade Turmoil

Global trade turbulence has intensified after US President Donald Trump announced a new wave of tariffs, stating his intention to impose broad 15% to 20% tariffs on most of America’s trading partners.

Trump announced a 35% tariff on goods imported from Canada. In a message posted on Truth Social, he informed Canadian Prime Minister Mark Carney that the new tariffs would take effect on August 1 and would increase further if Canada retaliated.

Trump also stated on Thursday that the European Union may receive a formal tariff letter by Friday, raising doubts about the progress of trade talks between Washington and the EU.

Brazilian President Luiz Inácio Lula da Silva said he hopes to find a diplomatic solution to Trump’s threat of a 50% tariff on Brazilian imports, but vowed to respond in kind if the tariffs go into effect on August 1.

Comments and Analysis

- Francesco Pesole, FX strategist at ING Bank, said markets are still digesting the recent tariff surprises, but there’s hesitation in trying to predict Trump’s next move.

- Pesole added: “I believe the general consensus still holds that Trump won’t impose new tariffs on China and will likely reach an agreement with the European Union.”

Japanese Interest Rates

- Last week’s data from Tokyo showed household spending in Japan rose by 4.7% year-on-year in May, marking the fastest pace since August 2022. The result far exceeded market expectations of a 1.3% rise, after a 0.1% decline in April.

- Following the data, market pricing for a potential 25-basis-point rate hike by the Bank of Japan in July increased from 40% to 45%.

- To reassess those odds, investors are now awaiting further data on inflation, unemployment, and wage growth in Japan.

The Australian dollar climbed against most major currencies on Thursday after markets absorbed the central bank’s latest monetary policy decision.

In a statement released early Tuesday, the Reserve Bank of Australia said it had decided to leave its benchmark interest rate unchanged, noting that it “needs more information to ensure inflation is steadily moving toward the 2.5% target.”

In the press conference following the meeting, Governor Michele Bullock said it was appropriate to adopt “a cautious and gradual approach to monetary easing,” but added that the bank could foresee further rate cuts if inflation slows as expected.

The decision came as a surprise, as markets had largely priced in a rate cut, prompting the Australian dollar to recover after losing nearly 1% on Monday.

As of 20:48 GMT, the Australian dollar rose 0.8% against the US dollar to 0.6588.

Canadian Dollar

The Canadian dollar also edged higher, rising 0.1% versus the greenback to 0.7316 by 20:48 GMT.

US Dollar

The US dollar index climbed 0.1% to 97.6 points by 19:40 GMT, after hitting a high of 97.9 and a low of 97.2 during the session.

President Trump announced Wednesday evening that a 50% tariff on imported copper would take effect on August 1.

He also imposed a 50% tariff on imports from Brazil, partially in response to the trial of former Brazilian President Jair Bolsonaro for his alleged role in attempting to overturn the results of the 2022 election.

Trump added that the decision was also due to what he described as a “very unfair trade relationship” with Brazil, calling it “far from reciprocal treatment.”

For his part, Brazilian President Luiz Inácio Lula da Silva said his country would respond to the US’s 50% tariffs in line with the principles of reciprocal economic treatment.

Government data released today showed that initial jobless claims in the US fell by 5,000 to 227,000 in the week ending July 5, while analysts had expected an increase to 235,000.

Bitcoin reached a new all-time high on Thursday, driven by growing demand from institutional investors and supportive policies adopted by the U.S. administration under President Donald Trump toward digital currencies.

The world’s largest cryptocurrency surged to a record level of $112,743.49, and was recently trading 1.7% higher at $112,621.63.

Anthony Pompliano, founder and CEO of Professional Capital Management, told investors in a Wednesday note: “Bitcoin is the only asset that becomes less risky the larger it gets.” He added: “In the past, most large asset managers couldn't gain exposure to Bitcoin when its market cap was between $100 and $200 billion. But now, with its value in the trillions, virtually every major asset manager in the world can allocate to it.”

Trump's Policies Support the Crypto Sector

Supportive policies from the Trump administration have boosted investor confidence and unlocked fresh capital flows into the crypto space.

For instance, Trump Media & Technology Group (DJT.O), operated by the Trump family, is seeking approval to launch a new ETF that would invest in a range of cryptocurrencies, including Bitcoin, Ethereum, Solana, and Ripple, according to a filing submitted this week to the U.S. Securities and Exchange Commission.

Rally Extends to Other Cryptos and Crypto Stocks

The surge in Bitcoin extended to other digital assets as well:

Ethereum, the second-largest cryptocurrency by market cap, climbed to a one-month high of $2,794.95 and was last up 5.4% at $2,740.99.

The rally also lifted shares of crypto-linked companies:

MicroStrategy Inc. (MSTR.O), co-founded by Bitcoin advocate Michael Saylor, rose 4.7% to $415.41.

Coinbase Global (COIN.O) gained 5.4% to reach $373.85.

Public Companies Add Bitcoin to Their Treasuries

While some investors have started taking profits, several publicly listed firms — including Trump Media and GameStop — recently announced plans to purchase Bitcoin and add it to their corporate reserves.

One analyst told MarketWatch: “It’s turning into a race to see who can accumulate the most purchasing power.”

Economic and Trade Risks May Shape the Rally’s Future

Sid Powell, CEO and co-founder of Maple Asset Management, believes the continuation of the rally will largely depend on macroeconomic conditions and progress in trade negotiations.

He stated: “If trade talks stumble as we near the August 1 deadline set by President Trump, Bitcoin could face additional pressure.” However, if progress is made on trade deals and inflation data comes in soft — prompting the Federal Reserve to resume rate cuts — that could further support Bitcoin’s climb.

Powell also noted that Wednesday’s Bitcoin jump was driven by a “risk-on” sentiment, after minutes from the Federal Reserve showed most policymakers anticipate rate cuts later this year.