According to media reports, on Thursday, the U.S. and the European Union took new steps toward formalizing their trade agreement, outlining plans that could lower tariffs on European automobiles while also opening the way to potential new reductions on steel and aluminum.

A joint statement published on Thursday represents progress in implementing the preliminary deal announced a month ago. It includes specific benchmarks for the EU to secure promised tariff reductions in sectors such as automobiles, pharmaceuticals, and semiconductors, as well as new commitments to address the regulation of digital services within the bloc.

The document is the culmination of intense negotiations aimed at resolving long-standing trade disputes and strengthening the transatlantic economic partnership. Both sides expressed hope that implementing these agreements would create a more predictable and business-friendly environment, stimulating growth and innovation.

President Donald Trump has repeatedly praised the broad U.S.–EU trade framework, calling it an important deal during a Monday meeting at the White House with foreign leaders, including European Commission President Ursula von der Leyen.

This event highlights the nature of trade talks under Trump. For example, he had already imposed a fixed 15% tariff on most European goods, half of the 30% he had previously threatened. However, the U.S. promise to extend this lower tariff to automobiles and auto parts now depends on the EU's formal introduction of legislation to repeal several of its own tariffs on American industrial goods and to grant preferential market access for certain U.S. seafood and agricultural products.

Regarding the automotive sector, the statement outlines coordinated actions on both sides of the Atlantic: the U.S. will legally enact the lower car tariffs after the EU formally introduces the necessary legislative proposal. The reduced 15% tariffs on imports of European cars — down from the 27.5% tariffs previously imposed by Trump — will take effect from the beginning of the same month in which the legislation is submitted.

Some EU countries had eagerly awaited this change, especially Germany, which exported 34.9 billion dollars' worth of new cars and auto parts to the U.S. in 2024.

According to an administration official, the legislative mechanism is intended to ensure the EU delivers on its promised tariff cuts and to provide the 27-member bloc with enough pressure to secure the political mandate needed for the changes. The U.S. also commits to applying lower most-favored-nation tariffs to a range of other European goods, including aircraft and components, generics and their ingredients, as well as certain natural resources. The U.S. further renews its commitment to cap sectoral tariffs on European pharmaceuticals, semiconductors, and timber products at 15%.

On steel and aluminum quotas, the shift away from plans outlined by the White House in July — when the Trump administration pushed to maintain 50% tariffs on metals — should help reduce the trade deficit with the EU and boost U.S. revenues. While no progress has yet been made, the EU and U.S. now say they intend to explore cooperation on protecting their domestic markets from overcapacity while ensuring reliable supply chains for one another. The document also raises key questions about how the EU can fulfill its pledge to invest 600 billion dollars in the U.S. or purchase around 750 billion dollars of American energy resources, including LNG, oil, and nuclear products, by 2028.

As for the FX market's reaction, traders seemed largely unconcerned with the deal's details, since no notable moves occurred after the document appeared in the media.

Turning to the current technical picture for EUR/USD, buyers now need to reclaim the 1.1660 level. Only then can they aim for a test of 1.1700. From there, a move to 1.1730 is possible, though achieving it without support from large players would be difficult. The furthest target is the 1.1768 high. In case of a decline, I expect significant buyer activity only around 1.1625. If no one steps in, it would be better to wait for a retest of the 1.1600 low or consider opening long positions from 1.1565.

As for the GBP/USD technical picture, buyers need to overcome the nearest resistance at 1.3480. Only then can they aim for 1.3530, above which a breakout would be challenging. The furthest target is the 1.3560 area. If the pair falls, bears will attempt to regain control at 1.3440. A successful break there would deal a serious blow to bulls and push GBP/USD toward the 1.3410 low, with potential extension to 1.3375.