The EU-US trade talks will proceed despite a court ruling against Trump’s tariffs, which does not affect existing tariffs on steel, aluminum, autos, or potential future tariffs on pharmaceuticals—key European exports likely to be central in negotiations. The EU may reconsider a mutual elimination of industrial tariffs, previously rejected by the US, and adopt a firmer stance in talks due to reduced pressure for quick concessions. Inflation in the eurozone’s major economies (Germany, Spain, Italy, and France, representing over 70% of the region’s output) is at or below the ECB’s 2% target for the first time in eight months, driven by a strong euro, falling energy costs, and easing wage pressures. This low inflation, alongside external risks like US tariffs, supports expectations for an ECB interest rate cut on June 5 to stimulate growth.

The US dollar weakened after initial strength following a court ruling on Trump’s tariffs, as markets anticipate increased uncertainty, boosting the safe-haven Japanese yen, supported by data favoring Bank of Japan rate hikes. Japan’s PM Ishiba, after inconclusive talks with Trump, emphasized fair trade and strengthening the CPTPP, aiming to deepen economic ties with Southeast Asia and Europe while maintaining US security ties. Japan’s economic data shows stable unemployment at 2.5%, elevated Tokyo CPI at 3.6% (indicating persistent inflation), and resilient retail sales growth at 3.3% year-on-year, supporting BOJ’s case for potential rate hikes despite a slight industrial output decline.