The European forex session on July 7, 2025, had limited new data. Key highlights included OPEC+ sources suggesting an increase of 550,000 barrels per day in September and the EU making progress in trade talks with the US. With not much happening today, attention is on President Trump’s expected tariff letters. He might send out 12 to 15 letters to secure trade deals, with a deadline of July 9.

Impact Of Tariffs

These tariffs would start on August 1, adding another deadline to think about. Trump has a history of using such tactics for negotiation. For now, the market is steady, viewing this as typical unless there are major shifts in equity positioning. In simpler terms, during early trading hours in Europe on July 7, 2025, there wasn’t much new information. Two updates stood out. First, OPEC+ hinted that oil production could rise by around 550,000 barrels per day in September, potentially lowering crude prices, especially if global demand doesn’t increase. Second, the EU and the US are making progress in their trade discussions, easing some current uncertainties. The main market focus today is on President Trump. He is likely to issue multiple tariff notices before Wednesday’s deadline. These tariffs won’t start immediately but will be enforced from August 1. This tactic has been used before as a way to pressure trading partners for concessions ahead of negotiations.

Market Reactions And Future Outlook

In short, markets know how Trump operates and are not likely to react strongly unless there’s a broader response, especially in US equities. Although the timeline is tight, it’s not urgent—more of a warning sign than an immediate threat. Right now, volatility is low, which keeps implied volatility readings modest and limits movements in derivative pricing. We are paying close attention to how this plays out with tariffs and how other markets respond. In previous situations, equity volatility has been the main driver for increased activity in FX, rates, and commodity options. Without that volatility, traders have little reason to change their long-term positions. Short-term options usually look past this kind of news unless they coincide with worsening risk sentiment. We’re not seeing the current pause as a sign of complacency. Instead, it reflects traders recognizing familiar patterns—a political tactic that might not lead to actual policy changes. Near-dated FX options are still calm, and with no major economic surprises expected soon, there’s little reason to push premiums higher. However, if the tariff letters include unexpected regions or industries, that could change things. Look for signs of stress in the forward curves. Small changes in skew may lead to quick shifts in pricing across sectors. Any deviation from usual sectors—considering beyond steel, autos, or agriculture—would require rapid adjustments. We’re preparing models for potential impacts, especially for markets tied to export-heavy economies as August approaches. As always, actual market flows are more telling than headlines. If we see unwinding in equity or commodity-linked positions, traders will likely seek protection quickly—first in equities, then rates, and FX. The calm won’t last if liquidity tightens. We are monitoring the situation closely. Create your live VT Markets account and start trading now.

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