The European Central Bank is leaving interest rates unchanged as it waits to see the impact of U.S. President Donald Trump’s tariffs on the economy before deciding whether to cut rates again.

The European Central Bank held its key interest rate at 2% at its July meeting, citing an "exceptionally uncertain" environment due to trade disputes. The EU remains locked in negotiations with the U.

The dollar traded sideways against the euro on Thursday after the European Central Bank held rates steady, and was wedged between prospects for higher Japanese rates that supported the yen and worries about political risk after Sunday's elections.

Investors are hopeful a potential trade deal between the U.S. and European Union could bring more certainty to markets ahead of next Friday's tariffs deadline.

The European Union and the United States could reach a framework deal on trade this weekend, ending months of uncertainty for European industry, EU officials and diplomats said on Friday. The deal would likely include a 15% baseline tariff on all EU goods entering the United States and probably a 50% tariff on European steel and aluminium,