In a landmark move, U.S. President Donald Trump and European Commission President Ursula von der Leyen unveiled a sweeping trade agreement that establishes a 15% baseline tariff on most European goods entering the United States. The announcement followed closely behind a similar U.S.-Japan deal and just ahead of renewed U.S.-China trade negotiations, signaling a fast-moving global shift toward aggressive but calculated trade realignment. The deal spurred investor confidence, lifting equities and riskier assets as optimism around reduced trade uncertainty took hold. A critical component of the agreement is the EU’s pledge to purchase $750 billion in U.S. energy exports and to significantly invest in American infrastructure and defense products. Notably, while most sectors will face the 15% tariff, some strategic industries—including semiconductor capital equipment—have been granted a zero-tariff status. ASML, the Dutch chip equipment giant, emerged as a clear winner, with analysts at Lynx Equity Strategies highlighting the exclusion as a pivotal boost for the company’s U.S. market access. While the trade deal eased global uncertainty, all eyes now turn to the Federal Reserve. The central bank begins its two-day FOMC policy meeting today, with markets largely pricing in a rate hold. However, political pressure from Trump and Fed officials like Chris Waller and Michelle Bowman advocating for a rate cut have created uncertainty, pushing the U.S. Dollar Index lower and tempering demand for dollar-denominated assets. Investors are also wary of mounting political interference and threats to the Fed’s independence, with Trump repeatedly criticizing Fed Chair Jerome Powell for resisting rate reductions. Powell’s press conference and the FOMC statement on Wednesday are expected to be critical in shaping the dollar’s trajectory, as traders seek clarity on the path of monetary policy amid rising inflation concerns tied to new trade tariffs. Meanwhile, global oil prices surged more than 2% Monday and remained stable in early Tuesday trading, buoyed by Trump’s announcement of a shortened deadline for Russia to end its war in Ukraine. Trump issued an ultimatum, giving Russia just 10 to 12 days to show tangible progress or face sweeping U.S. sanctions, including potential 100% secondary tariffs on countries that continue importing Russian oil. This raised fears of tightening global oil supply and fueled bullish sentiment in energy markets. Brent crude held near $68.64 per barrel, while WTI hovered at $65.31. Adding to oil’s strength was news that an OPEC+ panel reaffirmed the need for full compliance with output quotas, ahead of the group’s August 3 meeting, where a potential production increase for September will be discussed. The ongoing trade optimism, combined with geopolitical tension and energy supply concerns, has led to heightened investor vigilance. Market sentiment remains mixed as the week unfolds, with upcoming U.S. macroeconomic releases, the Fed’s policy decision, and developments in the Russia-Ukraine conflict poised to shape global market dynamics for weeks to come. Learn the skills to trade like a pro with MJFXM Trading Courses – your gateway to smart and successful trading.