The European Commission conditionally accepts the 10% tariff from the United States, causing the euro to briefly fall to 1.0280 against the dollar. The compromise plan requires exemptions for core industries such as automotive, pharmaceuticals, and semiconductors, and will implement tariffs in three phases (July 2025, October 2025, and January 2026). This decision stems from economic pressure on the EU (manufacturing PMI has contracted for eight consecutive months) and the consideration to avoid an escalation of the trade war.

Analysis by Qin:

Core logic: The EU aims to exchange short-term currency depreciation for a political buffer period. With the German and French elections approaching (September 2025), the 10% tariff compromise is essentially a delay of a full trade war, but the risk of internal division is increasing—France's far-right threatens impeachment, and Germany's industrial alliance warns of a €7 billion loss.

Market signals:

Short positions in the euro have reached a three-year peak, betting on a fall to parity by year-end;

1.0150 has become a critical threshold for bulls and bears; losing this level will trigger capital flight;

The dollar index breaks above 108 mainly due to demand for safe-haven US Treasuries (yield at 4.3%) and the European Central Bank's interest rate cut probability rising to 80%.

Operational strategy:

Short the euro near 1.0300, targeting 1.0150 (stop loss at 1.0380);

Hedging strategy: long gold + short European automotive stocks (Daimler/Volkswagen);

If the agreement on July 8 receives partial exemptions, reverse to long the euro targeting 1.0550.

Ultimate risk: Trump pushing for a 20% tariff, forcing the EU to retaliate and triggering a spiral decline in the exchange rate.