The resilience of the euro is evident as the market bets that Trump's 30% tariff will ultimately prove to be a "paper tiger".

Due to the widespread market expectation that the EU will reach a trade agreement with the United States, thus avoiding the 30% punitive tariffs threatened by Trump over the weekend, the Euro to US Dollar exchange rate showed resilience on Monday, holding steady near 1.1695. Although the Euro to US Dollar exchange rate briefly fell 0.3% to a three-week low of 1.1651 in early trading, it later recovered all lost ground. Last Saturday, as US-EU trade negotiations remained deadlocked, Trump once again threatened with a 30% high tariff, with tariffs on cars and Shenzhen Agricultural Power Group still being the core sticking point in the negotiations. European Commission President von der Leyen stated that the decision to extend the suspension of retaliatory trade measures to August 1 was made, allowing room for further negotiations. "Such threats seem to be a typical strategy for Trump to push negotiations," said Chris Turner, Head of Foreign Exchange Strategy at ING Group, "We expect the EU to secure more favorable terms, but market volatility may intensify before August 1." Currently, the market's concern over US tariff threats is diminishing, and investors seem convinced that the Trump administration will back down again, as shown by past policy reversals. This expectation has prompted warnings from financial leaders such as JPMorgan CEO Jamie Dimon about the market's blind optimism. Bloomberg strategist Ven Ram stated, "Foreign exchange traders are clearly betting that the 30% punitive tariffs will not materialize. It seems that the EU's preferred strategy is to resolve issues through negotiation rather than confrontation. Interest rate markets have already digested the impact of tariffs in advance, with forward pricing indicating that the market expects the European Central Bank to only cut rates once more in this cycle." European bonds gave back gains in early trading, with the yield on German two-year government bonds slightly falling by 1 basis point to 1.89%, after dropping by 3 basis points earlier. As market attention shifts to EU bond issuance, the yield on 30-year bonds climbed to its highest level since 2023.