The euro slipped below 1.17, retreating from the 2021 highs reached last month, as rising trade tensions continued to weigh on investor confidence. The US President indicated that the European Union would soon receive a letter specifying the specific tariff rates it will face, suggesting that EU efforts to reach a trade deal before the August 1 deadline are waning.

He also announced his intention to impose across-the-board tariffs of 15-20% on most trading partners, casting further doubt on earlier expectations of a prime rate of 10%.

Despite the recent fall in the first half of July, the euro has gained almost 13% against the dollar since the start of the year, supported by general dollar weakness and renewed hopes of economic recovery, notably following increased budget spending in Germany. On the monetary policy front, the ECB is expected to keep interest rates unchanged this month, but markets are still anticipating at least one further cut later in the year.