(Updates prices throughout, adds fresh analyst comment)

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Dollar index on track for biggest H1 drop since early

1970s

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Euro hits highest since 2021 against the greenback

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China trade progress precedes July 9 tariff deadline

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Canadian dollar strengthens after US digital tax is halted

By Chibuike Oguh

NEW YORK, June 30 (Reuters) - The dollar hit a near

four-year low against the euro on Monday amid worries over

rising U.S. government deficit and uncertainty surrounding trade

deals with major countries.

Senate Republicans will try to pass President Donald Trump's

sweeping tax-cut and spending bill, despite divisions within the

party about its expected $3.3 trillion hit to the nation's debt

pile.

The dollar dropped 0.63% to 0.79355 against the Swiss franc

, on track to end the month down 3.60%. The greenback

has lost about 12.5% against the Swissie this year.

The euro hit its highest against the dollar since

September 2021 at $1.1780. It was last up 0.45% and set to gain

about 3.8% for the month. The single currency has gained about

14% against the dollar this year.

"There's a lot of focus around the big, huge bill and

whether that gets approved," said Amo Sahota, executive director

at FX consulting firm Klarity FX in San Francisco. "The dollar

has been on a weakening trend. We are halfway through the year

and the big winners have the stocks (Swedish krona), the Swiss

franc, and the euro. The euro's fortunes turned after the euro

zone announced a huge spending bill."

The EU is open to accept a trade agreement with the US that

would apply a universal 10% tariff on many of its exports,

Bloomberg News reported on Monday.

Treasury Secretary Scott Bessent said that countries could

still face sharply higher tariffs on July 9 even if they are

negotiating in good faith, adding that any potential extensions

will be up to Trump.

The U.S. and China had resolved issues around shipments of

Chinese rare earth minerals and magnets to the United States,

further modifying a May deal in Geneva, Bessent had said last

week.

"You have a weak dollar due to a potentially large increase

in our budget deficit, and you have continued uncertainty around

these tariff deals," said Eugene Epstein, head of structuring

for North America at Moneycorp in New Jersey.

"We had this positive news from the EU for a little bit and

we had potential positive deals coming up, but then you had

Trump doing a temporary about-face on Friday on Canada and so

forth," Epstein said.

Trump said Japan would be among countries to receive a trade

letter outlining tariffs they would need to pay to the U.S.

The dollar was down 0.36% to 144.45 against the Japanese yen

, on track to finish the month flat versus the Asian

currency.

Canada halted its plans to begin collecting a new digital

services tax targeting U.S. technology firms just hours before

it was due to start on Monday in a bid to advance stalled trade

negotiations with Washington.

The Canadian dollar strengthened against the U.S. currency

on the session. It was set to notch its fifth straight month of

gains against the greenback. The loonie was up 0.41%

versus the greenback to C$1.353 per dollar.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

fell 0.35% to 96.86, on track for its sixth straight month of

losses. It is set to mark its worst half-year since the 1970s.

"It's kind of rotating a game of musical chairs, whether

it's the 'big beautiful bill', the trade deals, and then the

Iran-Israel conflict. It's all like taking turns to be at center

stage; once one thing passes and the other thing is focused on,"

Epstein said.

The Swedish krona strengthened 0.48% versus the

dollar to 9.462. Sterling strengthened 0.04% to $1.3719.

It is up 2% in June.