The US dollar index dipped to around 97.5 on Monday, retreating after a two-day advance as the euro strengthened following the weekend’s US-EU trade agreement. The deal, which imposes a 15% tariff on most European exports, down from the 30% initially threatened, eased transatlantic trade tensions and boosted demand for the euro. Meanwhile, investors are turning their focus to a pivotal week for US monetary policy and economic data. The Federal Reserve is widely expected to leave interest rates unchanged on Wednesday, but markets will closely watch for signals regarding a potential rate cut in September. On the data front, the latest Personal Consumption Expenditures report, considered the Fed’s preferred inflation gauge, will offer insight into how tariffs are influencing consumer prices. A raft of labor market indicators is also due this week, culminating with Friday’s closely watched monthly jobs report.
