EUR/USD is holding its ground near 1.1700 after Monday’s gains, and it’s not just about technicals, it’s all about tariffs. The US Dollar is losing steam as fresh trade friction between Washington and Brussels sends investors reaching for alternatives.
Here’s what you need to know so far:
1. Technicals: Bulls Have the Edge.
EUR/USD is holding above 1.1680, keeping the bullish tone intact. The pair is pressing against resistance at 1.1710, the June swing high. A breakout here could pave the way for 1.1800 and, eventually, 1.1900. Momentum favors buyers for now, supported by a series of higher highs and higher lows.
On the flip side, initial support sits at 1.1680, followed by 1.1660. A drop below 1.1620 would signal fading bullish pressure, exposing the 1.1485 zone. Below that, the 50 and 100-week SMA around 1.0947 serves as a deeper safety net. For now, all eyes are on whether bulls can clear 1.1710 to extend the rally.
2. Tariff Threats Turn Nuclear
JUST NOW: President Trump is pushing for a 15-20% minimum tariff on all goods from the European Union as per the Financial Times.
Friday morning pump gone 😂
Seems like he likely will be using this to continue negotiations with the EU.
— #amit (#@amitisinvesting)
4:45 PM • Jul 18, 2025
Reports from the Wall Street Journal dropped a bombshell: Trump wants the EU’s baseline tariff to jump to 15–20%, up from the earlier 10% floated in negotiations. On top of that, the 25% auto tariff? Still locked and loaded.
The EU is no longer playing nice, Germany, previously a voice of restraint, is now in full agreement with France on retaliation. One official told Bloomberg bluntly: “If they want war, they will get war.” That’s the kind of rhetoric traders can’t ignore.
3. Dollar Slides as Risk Grows
When trade war headlines hit, the USD usually flexes as a safe haven. Not this time. Why? Because these tariffs target major US trade flows, and that’s bad for growth. The DXY is cooling off after a sharp run-up, giving EUR/USD room to breathe.
The Dollar Index (DXY) has slipped to 97.88 after touching a monthly peak near 99.00 last week. For us traders, this isn’t random noise, it’s a classic macro tug-of-war: tariffs, central bank expectations, and a market trying to front-run the next move.
4. ECB in Focus — No Rate Change, Big Implications
The European Central Bank meets Thursday. Rates will likely stay on hold, but the tone matters. If Christine Lagarde leans dovish in her press conference, expect the euro’s upside to stall fast. Hawkish hints, however, could extend EUR/USD’s rally beyond 1.1700.
On the US side, the Fed isn’t expected to cut or hike next week, holding rates in the 4.25%-4.50% zone. But traders are laser-focused on Powell’s language. Any sign that tariffs might force a shift toward cuts later this year? That could add more fuel to euro strength.
Here’s the Takeaway:
This isn’t just a EUR/USD story, it’s a macro war spilling into FX charts. Tariffs are now the wild card, and central banks are stuck balancing trade shocks with inflation goals. For us traders, that means more volatility ahead. Watch 1.1735 on the topside and Thursday’s ECB presser for the next big move.