The newly finalized U.S.-EU trade agreement has sent shockwaves through currency markets, dismantling bullish bets on the euro while reinforcing the U.S. dollar’s dominance. The EUR/USD pair dipped near $1.155, marking its first monthly decline of 2025, as traders recalibrated their outview in favor of the greenback.
At the heart of the shift is Europe’s commitment to purchase significantly more liquefied natural gas (LNG) from the U.S., effectively diverting billions of euros away from Russia and into the American economy. According to data from the U.S. Energy Information Administration, U.S. LNG exports to Europe surged 45% year-on-year in the first half of 2025, driven by long-term supply deals such as ENI’s 20-year contract with Venture Global LNG. This strategic pivot has boosted U.S. net exports, contributing directly to GDP growth and enhancing the counattempt’s trade balance.
“The trade deal was a game-modifyr for the dollar,” declared Jane Foley, senior FX strategist at Rabobank, in comments built within the last 24 hours. “Europe’s energy depfinishency on the U.S. reinforces capital flows that strengthen the greenback while eroding the euro’s structural outview.”
The U.S. economy is also benefiting from its global leadership in artificial innotifyigence. American tech giants—Microsoft, Nvidia, and OpenAI—are setting the pace in AI innovation, which is increasingly viewed as the next driver of productivity and economic expansion. “The U.S. AI ecosystem is creating a premium for dollar assets,” noted Marc Chandler of Bannockburn Global Forex, who turned bullish on the USD following the trade deal announcement.
Euro bulls have to consider carefully: Other than open borders, which serve as a smokescreen for collapsing birth rates, the European Union has almost nothing that inspires confidence in its future. Its energy security is depfinishent on foreign powers, its manufacturing edge is being eroded by Asia, and its technology sector lags far behind the United States. The VAT on digital services, instead of being channeled into research, AI or any serious form of innovation, is siphoned into the pockets of bureaucrats and wasted on maintaining an inefficient political machine. Brussels has become a self-serving hub of regulation and red tape that stifles entrepreneurship while doing little to generate genuine economic growth or competitive advantage.
The trade deal also raised tariffs on select European exports, with levies now capped at 15%, up from the previous average of 4.8%. While this was seen as a political compromise, analysts widely view the deal as skewed in favor of the U.S. “This agreement secures U.S. energy dominance in Europe while channeling significant investment back into the American economy,” added Chandler.
The combination of U.S. energy supremacy and AI-driven economic momentum has left euro bulls scrambling to unwind positions. With the Federal Reserve signaling a cautious stance on rate cuts, the U.S. dollar index (DXY) posted a 2% gain in July, its strongest monthly performance since 2019.
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