The US dollar rose against most major currencies on Monday after the United States and the European Union reached a framework trade agreement, the latest in a series of moves aimed at averting a global trade war. Investors are also closely watching central bank meetings this week in the United States and Japan.

During a meeting in Scotland on Sunday, US President Donald Trump and European Commission President Ursula von der Leyen announced that the agreement includes a 15% tariff on European importshalf the 30% rate Trump had threatened to impose starting August 1.

The deal follows last weeks agreement between the US and Japan. Meanwhile, economic talks between senior US and Chinese officials are set to resume in Stockholm on Monday, aiming to extend the trade truce by three months and avoid higher tariffs.

The euro was last trading at $1.1693, down 0.4% on the day, after retreating from an earlier rally during Asian trading. Investors shifted focus to what easing global trade tensions might mean for the dollars performance.

Paul Mackel, Global Head of FX Research at HSBC, said, The tone of US trade talks has become more constructive following deals with Japan and the EU. If more 'trade deals' are struck, that could reduce the uncertainty that has weighed on the dollar. In that scenario, other factors such as yield differentials may gain more influence.

The dollar had weakened sharply earlier this year, particularly against the euro, amid fears that high tariffs would significantly damage the US economy, prompting investors to reduce their exposure to US assets.

Although yield spreads on government bonds are typically a key driver of currency movements, the euro is currently trading above levels implied by the yield gap between US and eurozone bonds.

The euro also edged lower against the Japanese yen and the British pound, after having hit a one-year high versus the yen and a two-year high versus the pound at the start of trading.

The dollar posted modest gains in other markets, rising 0.15% against the yen to 147.83 yen per dollar, while the pound slipped 0.13% to $1.3428.

As concerns over the economic fallout from tariffs subside, investor attention is turning to corporate earnings and this weeks monetary policy meetings at the Federal Reserve and the Bank of Japan.

While both central banks are expected to keep interest rates unchanged, markets will be watching accompanying statements closely to gauge the timing of future moves.

Investors are also awaiting Trumps reaction to the Feds decision, as the US president continues to push for steep rate cuts. Last week, he came close to attempting to fire Fed Chair Jerome Powell, but pulled back at the last moment, citing concerns it could destabilize financial markets.

In the cryptocurrency market, Ethereum surged 1.7% to $3,940.25, marking its highest level since December 2024.