EUR/USD Slides Below 1.1700 as Tariff Fears Boost Dollar to 2-Week High

• EUR/USD Records First Weekly Decline in Three Weeks, Closing at 1.1688
• Trump Considers Comprehensive Tariffs, Targeting EU and Copper Exports
• Dollar Achieves Strongest Week Since March Amid Widespread Risk Aversion

EUR/USD concluded the week with a decline exceeding 0.70%, ending Friday’s trading session down by 0.10% and below the 1.1700 mark. This movement underscores a potential pullback to test significant support levels as the US Dollar records its strongest week in four months. Currently, the pair is trading at 1.1688.

A risk-averse sentiment has been ignited by US President Donald Trump’s ongoing efforts to expand tariffs not only to more countries but also to commodities such as copper. Reports indicate he might impose comprehensive tariffs, with particular focus on a forthcoming letter to the European Union (EU), which has just experienced its first weekly loss in three weeks.

The economic calendar was light in both the US and Europe, featuring public appearances by Federal Reserve officials and the release of June’s Wholesale Prices data from Germany.

Daily Market Digest: Euro Under Pressure as Trump Prepares Tariff Letter for EU

• The Euro faced downward pressure as reports surfaced about Trump’s plans to dispatch a tariff letter to the EU. Additionally, he implemented a 35% tariff on Canadian imports and is reportedly considering blanket tariffs of 15% to 20%, signaling an intensification of the trade conflict.
• Chicago Fed President Austan Goolsbee, a future voting member in 2025, commented that the new tariff rounds complicate the assessment of true economic performance. He mentioned that tariffs might postpone rate cuts and expressed a preference to wait until market anxieties subside before confirming that the US economy is on a path to a smooth recovery.
• European Central Bank (ECB) officials displayed varied views on monetary policy. Isabel Schnabel was notably hawkish, stating that “the threshold for another rate cut is very high” and saw no immediate need for further easing unless inflation significantly deviates from the ECB’s 2% target over the medium term—a scenario she currently sees no evidence of.
• Conversely, ECB’s Fabio Panetta showed a slightly dovish stance, noting that if downside risks to growth increase and reinforce disinflationary pressures, further monetary easing might be necessary.
• Germany’s Wholesale Prices rose by 0.2% month-over-month in June, rebounding from a 0.3% decrease in May. Annually, prices increased from 0.4% to 0.9% during the same period.

Technical Outlook for EUR/USD: Pair Falls Below 1.1700 with Potential to Reach 1.1500

EUR/USD has dipped below the 1.1700 level but remains above the 20-day Simple Moving Average (SMA) of 1.1662. Despite a rebound to current levels, staying below 1.1700 suggests potential for further declines.

Immediate support is found at the 20-day SMA. If this level is breached, the next targets are 1.1650 and subsequently the 50-day SMA at 1.1464.