Tariff Concerns Persist; Tech Earnings Loom, Fed in Blackout

The EUR/USD pair surged over 0.50% on Monday amid broad-based weakness in the U.S. Dollar, as Treasury yields declined and trade uncertainty intensified ahead of the looming August 1 deadline for a potential U.S.-EU tariff agreement.

Risk sentiment improved notably at the start of the week, bolstered by investor anticipation of earnings from U.S. tech giants. However, the market remains cautious as diplomatic tensions between the U.S. and European Union escalate. EU officials are reportedly preparing a broader set of retaliatory trade measures in the event that ongoing negotiations fail to produce a deal.

The European Central Bank is widely expected to keep interest rates steady at its upcoming policy meeting on July 24, following a series of rate cuts earlier in the year. Attention is already shifting toward next week’s Federal Reserve meeting, with investors seeking clues on the U.S. central bank’s forward guidance.

Political friction is also casting a shadow over the Fed, as Chair Jerome Powell faces renewed scrutiny. Congresswoman Anna Paulina Luna has formally accused Powell of perjury regarding statements tied to renovation funding for the Federal Reserve's Washington headquarters—raising fresh concerns about institutional stability.

This week’s European economic calendar includes July’s Consumer Confidence figures, Flash PMIs, and the ECB’s rate decision, all of which could steer the Euro’s trajectory. In the U.S., key data releases will cover housing starts, S&P Global Flash PMIs, weekly jobless claims, and durable goods orders.

Gold prices rallied sharply on Monday, gaining more than 1% as the U.S. Dollar and Treasury yields dropped in response to heightened global trade tensions and renewed risk appetite in financial markets.

Investor sentiment turned more optimistic to start the week, with markets buoyed by anticipation of upcoming U.S. corporate earnings. However, lingering uncertainty over the August 1 tariff deadline—set by the White House—continues to weigh on confidence. The U.S. remains locked in negotiations with key trade partners, including the European Union, Canada, and Mexico, without a clear path to resolution.

According to a Bloomberg report, EU diplomats are expected to convene as early as this week to formalize a retaliatory strategy should negotiations with the U.S. collapse. The proposed plan targets roughly €72 billion worth of American exports, spanning industries such as automobiles, aerospace, digital services, and consumer goods like bourbon whiskey.

Meanwhile, the People’s Bank of China left its key lending rates unchanged in its latest policy meeting, in line with expectations and contributing to a relatively stable backdrop in Asia-Pacific markets.

In the U.S., the economic calendar is relatively light this week, with notable releases including housing market data, weekly jobless claims, and durable goods orders.

Looking ahead to the Federal Reserve’s July 30 meeting, markets overwhelmingly expect the central bank to keep rates on hold. With gold now eyeing further gains amid sliding yields, Dollar weakness, and deepening trade tensions, traders should be prepared for increased volatility in precious metals and broader risk assets in the days ahead.

Oil prices declined on Monday, as investors weighed the limited impact of newly imposed European sanctions on Russian crude exports, while escalating trade tensions between the United States and the European Union added to market caution.

Despite a pullback in the U.S. Dollar which would typically support commodity prices crude benchmarks remained under pressure.

Investor sentiment took a hit amid signs of a deepening transatlantic trade conflict. Reports indicate ongoing disagreements between Washington and Brussels, with the U.S. demanding tariffs of at least 15% on European Union exports—an aggressive stance that caught EU officials off guard. Brussels is reportedly preparing retaliatory measures targeting American goods.

Market participants are increasingly concerned that such elevated tariffs could disrupt global trade flows and weigh on energy consumption, particularly in developed economies.

Oil markets also showed a muted response to the European Union's newly expanded sanctions on Russia’s oil sector, tied to the ongoing war in Ukraine.

The sanctions come amid a protracted Russia-Ukraine conflict that has now entered its fourth year. While the war initially drove oil prices to multi-year highs due to supply shock fears, those concerns have since receded as global markets adjusted and rerouted supply chains.

Despite a softer dollar, oil prices remain weighed down by fears of a global economic slowdown driven by rising protectionism. With the August 1 deadline for U.S. tariffs fast approaching, energy markets are likely to remain sensitive to developments in trade negotiations between the U.S. and its key partners.

U.S. equities advanced on Monday buoyed by gains in megacap tech stocks such as Alphabet and Amazon. Investor optimism surrounding upcoming earnings and hopes that pending trade agreements may soften the economic impact of global tariffs helped lift sentiment.

Alphabet surged 2.79% ahead of its highly anticipated earnings release scheduled for Wednesday. The Google parent and fellow “Magnificent Seven” member Tesla, also set to report midweek, are expected to set the tone for a pivotal week of earnings from tech heavyweights.

The August 1 deadline for the implementation of new U.S. tariffs remains a key concern for markets. President Donald Trump has proposed steep duties—30% on EU and Mexican imports, and additional tariffs ranging from 20% to 50% on goods from Canada, Japan, and Brazil.

Despite rising trade tensions, Commerce Secretary Howard Lutnick expressed confidence over the weekend that a deal with the European Union remains within reach. However, EU officials are reportedly weighing retaliatory measures if negotiations break down.

Investors will be closely watching this week’s economic releases, particularly Thursday’s jobless claims and July business activity figures, for insight into how tariff uncertainty is affecting the domestic economy.

Federal Reserve Chair Jerome Powell is also set to speak later today, and markets will be parsing his comments for guidance on the timing of a potential rate cut.