EUR/USD Falls from Monthly Highs as US-EU Trade Optimism Boosts Dollar

EUR/USD Reverses on Progress in US-EU Trade Talks, Dovish ECB

The EUR/USD currency pair pulled back from its monthly high of 1.1425, falling to around 1.1360 during Tuesday's North American session. The decline follows increased selling pressure at levels above 1.1400, as the US Dollar (USD) regains strength on growing optimism around a US-EU trade agreement.

The US Dollar Index (DXY) rose 0.4% to approximately 99.35, recovering from earlier weakness. The shift in sentiment came after reports that EU officials requested investment proposals from local companies for operations in the US—an indication of serious engagement between Brussels and Washington.

European Trade Commissioner Maros Sefcovic also confirmed the bloc’s dedication to fast-tracking negotiations, easing geopolitical tensions and prompting a market rotation away from risk-off positions like the Euro.

Meanwhile, a slowdown in French inflation in May adds to the dovish sentiment surrounding the European Central Bank (ECB). Softer price data may strengthen the case for a potential interest rate cut in June, further weighing on the Euro.

With both macroeconomic and geopolitical dynamics in play, traders are now closely watching for further trade updates and ECB policy signals to guide the next move in EUR/USD.