Markets confident of 'imminent' trade deal between EU-US

The euro appears to have found some support above the 1.17 level on the dollar with markets seemingly confident that a trade deal is imminent between the US and EU that would avoid higher tariffs on 1st August.

President Trump said yesterday that he was two days away from sending a letter to the common bloc outlining an increase in tariff rates, but reports out of the EU suggest that the two sides are close to striking a preliminary agreement that would keep import duties at just 10% - we could even receive news on this as soon as today. This could provide some upside for the euro against most currencies, although a likely relief rally in the dollar would act to limit the move upwards in EUR/USD.

There isn’t too much in the way of Euro Area economic data during the remainder of the week, so focus will be on trade developments and communications from a handful of ECB officials. Governing Council members Lane, de Guindos and Nagel will all be speaking later today. Forward guidance is likely to be limited, particularly given acute levels of trade uncertainty.