• EUR/USD retreats after hitting a two-week high earlier on Thursday, following the European Central Bank’s decision to hold rates steady.
• The US Dollar strengthens on the back of solid US economic data and trade optimism.
• US President Trump signals a “50-50 chance” of reaching a trade deal with the EU.

The Euro (EUR) trades with a negative tone against the US Dollar (USD) on Friday as the Greenback regains upward momentum, supported by resilient US economic data, renewed trade optimism, and expectations that the Federal Reserve (Fed) will leave interest rates unchanged at its upcoming monetary policy meeting on Wednesday.

The EUR/USD is trading modestly lower during the American trading hours, easing from a near two-week high marked on Thursday and just shy of its highest level since August 2021. The pullback comes after the European Central Bank (ECB) opted to keep interest rates unchanged on Thursday, reflecting heightened uncertainty particularly surrounding US-EU trade negotiations ahead of the August 1 tariff deadline. At the time of writing, the pair is trading around 1.1715, though it remains up nearly 0.80% for the week.

Meanwhile, the US Dollar Index (DXY), which measures the Greenback’s value against a basket of six major currencies, is staging a modest recovery from near a two-week low, hovering around 97.80.

Earlier this week, reports surfaced suggesting that the United States and the European Union are exploring a potential trade agreement similar to the recently announced US-Japan deal, which includes a 15% cap on reciprocal tariffs for key goods. While no official deal has been confirmed, US President Donald Trump stated during a press conference on Friday that there is a “50-50 chance” of reaching an agreement with the EU, which helps maintain trade optimism and supports broader market sentiment.

ECB policymaker François Villeroy de Galhau struck a cautious tone on Friday, noting that while the Eurozone economy remains resilient, risks tied to prolonged trade tensions and a stronger Euro could weigh on inflation. Speaking at a financial forum, Villeroy said the central bank must remain fully open to future rate adjustments, including the possibility of additional cuts if warranted by incoming data. His remarks echoed the broader ECB message of monetary flexibility, underscoring the bank’s commitment to a meeting-by-meeting approach amid a highly uncertain global outlook.