The U.S. dollar recorded its biggest single-day gain since early May, driven by renewed concerns over the global economic impact of tariffs following a new trade deal between the United States and the European Union. On Monday, the Bloomberg Dollar Spot Index rose nearly 0.8% against major currencies, putting the greenback on track for its first monthly gain of the year, up 1.5% so far in July.

The weekend agreement between the U.S. and EU triggered a broad rally in the dollar, with the euro suffering the most as investors viewed the deal’s asymmetrical structure as potentially damaging to European growth. Analysts pointed out that the terms of the agreement favor U.S. exporters while leaving EU goods subject to much higher tariffs. Aroop Chatterjee of Wells Fargo remarked that markets are now realizing how these types of “asymmetric deals” can be negative for global growth, particularly outside the U.S.

European Commission President Ursula von der Leyen noted that the aim of the deal is to address the EU’s longstanding trade surplus with the U.S., but many market participants viewed it as a short-term win for Washington and a structural risk for Europe.

At the same time, U.S. and Chinese officials began two days of negotiations to extend their tariff truce beyond an August 15 deadline. This adds another layer of complexity for global markets, which are already bracing for a packed week that includes the Federal Reserve’s interest rate decision, the Treasury’s quarterly debt issuance update, and key U.S. labor market data. President Donald Trump has also set an August 1 deadline for trade negotiations, threatening sweeping tariffs if deals are not finalized.

Despite the geopolitical noise, the U.S. Treasury market remained relatively stable. Monday’s $139 billion in debt auctions were well received, with five-year notes yielding slightly more than expected and the 10-year yield steady around 4.41%.

The dollar’s resurgence underscores how sensitive global markets remain to trade policy shifts. As investors navigate a dense week of economic and political events, the implications of this latest U.S.-EU deal are likely to reverberate well beyond currency markets.