The common currency is mostly staying out of the headlines for now, as the summer months traditionally go by in Europe without much economic or policy news.
The economic backdrop in the Eurozone remains challenging, with PMIs indicating stagnation and a German manufacturing sector that has yet to show any substantial impact from the German fiscal package announced earlier in the year (we don’t expect this to be reflected until 2026).
The 15% tariffs agreed with the US remove the direst scenarios and should provide some certainty and clarity for businesses, but they also provide another headwind through what is set to be weaker external demand.
All in all, we think that it will be challenging for the euro to rally much further from here. That said, the Trump-Putin meeting will be closely watched on Friday, and any positive news here could provide some modest upside.
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