USD/EUR faces pressure as Trump's Ukraine arms deal impacts defense spending

USD/EUR sentiment shifts bearish as Trump's proposed weapons sales to NATO allies for Ukraine support could strain European defense budgets and impact currency flows. The plan, discussed with President Zelensky, PM Starmer, and President Macron during the May NATO Summit, involves US arms sales to European nations who would then transfer weapons to Ukraine. This arrangement could significantly increase European defense expenditures, potentially weakening the EUR against USD as capital flows toward US defense contractors. The proposal may accelerate European fiscal spending, pressuring EUR stability while boosting USD through increased military exports. Markets are monitoring potential impacts on European debt levels and fiscal deficits. Technical traders should watch key EUR/USD support at 1.0800 as geopolitical tensions typically favor safe-haven USD flows over EUR during military escalations.