After Japan, the US is nearing a trade accord with the EUS&P Global PMIs in focus ahead of next week’s FOMC decisionECB to stand pat, Lagarde’s signals to be key for the euroS&P 500 hits a new record high, but earnings results come in mixedRisk Appetite Improves as EU and US Get Closer to a DealThe US dollar continued weakening against most of its major peers yesterday, recording the most prominent losses against the risk-linked currencies, the Australian and New Zealand dollars.This suggests that risk appetite remained supported following the US-Japan trade deal and may have received an extra boost by news that the EU and the US are very close to securing their own accord that would include a broad baseline 15% tariff rate on EU goods, while allowing some products to be exempted.Although the news may be further reducing the tariff-driven inflation risks, Fed fund futures are still pointing to 45bps worth of rate cuts this year, with the probability of a September rate cut remaining at around 65%. Perhaps investors have already discounted the likelihood of trade deals, at least with these two US allies.Today, dollar traders may turn their attention to the preliminary S&P Global PMIs for July for clues about how the world’s largest economy entered the second half of the year. The prices and employment subcomponents may be of extra importance, especially ahead of next week’s Fed decision. Cooling prices and further softness in the labor market may take the probability of a September cut closer to being a certainty, which could further weigh on the greenback.ECB to Stand Pat, Traders Eye Lagarde’s SignalsOn the heels of headlines surrounding tariffs and trade deals, the ECB will announce its interest rate decision today. In June, policymakers decided to cut rates by 25bps, with President Lagarde noting that they are in a “good position” with the current rate path.Since then, GDP data revealed higher than expected growth for Q1, while retail sales for April accelerated. Headline inflation ticked up to the Bank’s objective of 2% and the core rate held steady at 2.4%, corroborating the notion that the Bank could wait for a while before cutting interest rates again. According to money markets, investors expect only one additional quarter-point cut before this easing cycle ends, and they are fully factoring it in for December.Although Trump’s threats of a 30% tariff on August 1 were expected to complicate Lagarde’s mission to deliver a clear message today, headlines that the EU and the US are close to finding common ground and today’s improving PMIs allow for some confidence. If Lagarde signals that they are in no rush to proceed with the next – and probably last – rate cut, the euro could get a shot in the arm.Over in Japan, the yen rebounded and recovered earlier losses related to headlines that Japan’s PM Ishiba is thinking about stepping down next month, as Ishiba himself denied the reports, calling them “completely unfounded.” This bolstered rate hike chances, with the probability of a 25bps increase by December rising to almost 90%, thereby injecting more fuel in the yen’s engines.S&P 500 Hits Fresh Record High Ahead of Mixed EarningsThe EU-US deal optimism was reflected on Wall Street as well, with all three of its main indices closing Wednesday’s session in the green and the S&P 500 hitting a new record high. That said, stock futures today are pointing to a mixed picture, perhaps due to mixed earnings results after the closing bell yesterday.Alphabet (NASDAQ:GOOGL) reported better-than-expected numbers while raising its 2025 AI capital spending outlook. However, Tesla’s (NASDAQ:TSLA) figures were not similarly exciting. The results were mixed, with revenue being held back due to weaker demand amid backlash against Elon Musk’s political views, as well as intensifying competition.