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The euro is under pressure as fresh US tariffs reignite global trade tensions, adding uncertainty to the currency markets. This analysis covers the key developments, their impact on EUR/USD, and the technical levels to watch next.
Euro dips on tariff tensions
The euro slipped to its lowest level in three weeks against the US dollar early Monday, retreating to 1.1659.
The drop followed US President Donald Trump’s renewed escalation of global trade disputes through the announcement of sweeping new tariffs.
A proposed 30% levy on imports from both the European Union and Mexico added to a series of aggressive trade measures targeting long-standing allies.
Set to come into effect on 1 August, the new tariffs prompted a modest reaction across currency markets.
While the broader response was muted, the EUR/USD pair – already trading within a tight range for several weeks – was pressured lower by the revived uncertainty.
Officials from the EU and Mexico described the proposed tariffs as “unjustified” and “disruptive,” though neither bloc has introduced retaliatory measures as of yet.
The European Commission stated it would maintain its current suspension of tariffs until early August, hinting at efforts to de-escalate the situation diplomatically.
US CPI and Fed stance in focus for EUR/USD outlook
The spotlight now turns to Tuesday’s US Consumer Price Index (CPI) release, a key data point that could shape the direction of EUR/USD.
Market expectations are for a slight rise in core inflation, which may shift sentiment around future Federal Reserve actions.
Currently, futures markets suggest around 50 basis points of easing by December, despite Fed Chair Jerome Powell resisting political pressure for interest rate cuts.
Over the weekend, President Trump reiterated his criticism of Powell, even suggesting his resignation – raising fresh questions over the central bank’s independence.
A stronger-than-expected CPI print could push the EUR/USD below 1.1659, with rising US yields likely to boost the dollar.
On the other hand, a softer reading could offer some relief for the euro, especially if it coincides with a rebound in market risk appetite.
Technical analysis
The EUR/USD pair is currently hovering around 1.1665 after breaching the key support level at 1.1670—the lowest mark in three weeks – amid renewed concerns over US trade policy.
A failed attempt to break above 1.1700 preceded the move lower, and the price action is now reflecting waning bullish momentum.
Short-term moving averages (5-, 10-, and 30-period) have flattened and are beginning to slope downwards, hinting at a possible trend reversal.
Picture: EUR/USD tests 1.1650 support amid tariff uncertainty, as seen on the VT Markets app.
Meanwhile, the MACD is showing fading bullish momentum, with a slight bearish bias beginning to emerge – indicating increasing downward pressure.
Resistance remains firm at 1.1700–1.1740, underpinned by the 50-day SMA and recent highs.
Immediate support is found at 1.1650, with deeper levels around 1.1600 and 1.1560 (aligned with the 200-day SMA).
A confirmed break below 1.1650 could attract further selling interest, while a decisive reclaim of 1.1700 might open the door for another attempt at the 1.1740–1.1750 zone.
EUR/USD at a key juncture
In the days ahead, traders will closely monitor the US CPI data release (scheduled for 15 July), ongoing tariff developments, and any new commentary from the European Central Bank.
A weak inflation reading or a softening in trade tensions could fuel a euro recovery.
Conversely, stronger US data or heightened risk-off sentiment may continue to favour the dollar, keeping pressure on the EUR/USD pair.
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