The EUR/USD currency pair extended losses, plumbing a fresh 1-month low of 1.1527 on Tuesday, as market players realized the trade deal between the US and the EU was an unbalanced one, favoring the United States and offering little to improve the Euro Area’s economic outlook.

Meanwhile, investors braced for the outcome of the Federal Reserve’s two-day policy meeting.

The US and the EU reached a framework trade agreement over the weekend, which resulted in a 15% import tariff on the majority of EU goods.

France labelled the framework trade agreement as a “dark day” for Europe. And, Germany’s Chancellor Friedrich Merz warned the German economy would face “significant” damage because of the tariffs.

“It hasn’t taken long for markets to conclude that this relatively good news is still, in absolute terms, bad news as far as the near term implications for euro zone growth are concerned,” Ray Attrill, head of FX research at National Australia Bank, was quoted as saying by Reuters.

“The deal has been roundly condemned by France while others – including German Chancellor Merz – are playing up the negative consequences for exporters, and with that, economic growth.”

On the monetary policy front, the Federal Reserve is widely expected to leave its federal funds rate target range intact at 4.25%-4.50% at its July 29th-30th meeting.

US President Trump said last week he held a positive discussion with Fed Chair Powell, indicating the central bank’s chief might be inclined to reduce interest rates.

Investors will also be paying close attention to the press conference with Fed’s Powell for clues over the timing of any future interest rate cuts.

The minutes of the FOMC’s June meeting showed policy makers were divided on the timing and scale of potential interest rate cuts.

Though the majority of Fed officials expected some easing later this year, views ranged from favoring a rate cut as soon as July to favoring no cuts at all by the end of 2025.

The EUR/USD currency pair was last down 0.19% on the day to trade at 1.1566.