​Euro muted as trade talks stall

2025-05-27
Summary:

The euro neared late-April highs Tuesday as the EU agreed to speed up talks to avoid a trade war, with members urging calm as deadline nears.

The euro was close to the highest since late April on Tuesday as the EU said it agreed to accelerate negotiations to avoid a transatlantic trade war. Some member states are urging cool heads as deadline nears.

American flag and European Union flag

Talks so far have been beset with a multitude of problems, with no clear path to finding a middle ground. the US last week rejected a proposal sent by the European commission.


The bloc offered to jointly remove tariffs on industrial goods, to boost access for some American agricultural products and to co-develop AI data centres, Bloomberg reported.


Trump's 50% tariff threat would hit $321 billion worth of trade in goods. It is not clear whether the levies would be levied on imports not subject to the 'reciprocal' tariff, such as steel and cars.


The EU has prepared retaliatory tariffs on €21 billion of US goods in response. It is also preparing an additional list of tariffs on €95 billion of American products in case negotiations fail.


The EU could retaliate against US technology companies if the trade conflict with Washington escalates, German Chancellor Friedrich Merz said, pointing to the US surplus in service trade.

EURUSD

The single currency retained upside momentum since 12 May. It will be key to another leg higher to overcome the psychological resistance at 1.14, a pullback towards 1.1270 would occur otherwise.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. 

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