Dollar set for best week of 2025 amid trade deals, market optimism

The US dollar is heading for its strongest weekly performance this year, buoyed by a series of trade agreements that have so far managed to raise tariffs without triggering major retaliation or economic disruptions.

A significant boost came over the weekend, when the European Union agreed to accept a 15% hike in US tariffs, alongside pledges to ramp up spending on American energy and defence products. The development helped the dollar log its best daily gain against the euro since May, Caliber.Az reports via Reuters. 

While a stronger dollar may pose challenges for US exporters and is at odds with the Trump administration’s goal of reducing trade deficits through dollar depreciation, it has provided short-term support to markets. Wall Street indexes inched to fresh record highs on July 28, supported by upbeat sentiment and a busy corporate earnings season.

Major tech companies are set to report earnings this week, alongside firms like UPS, Merck, and Boeing. US futures remained in positive territory ahead of the opening bell on July 29, with European and Chinese markets also rebounding. Japan, however, bucked the global uptrend.

The rally in the dollar coincides with the start of the Federal Reserve’s two-day policy meeting. While no rate changes are expected this week, attention is already turning to the central bank’s September gathering.

Investors will also be watching key US economic indicators, with June job openings data due on July 29 and the goods trade report expected later this week—both of which will feed into second-quarter GDP calculations.

By Sabina Mammadli