EUR/USD drops below 1.1700 on tariff concerns, boosting Dollar to 2-week high

• EUR/USD Experiences 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

The EUR/USD pair concluded the week with a decline of over 0.70%, finishing Friday’s trading session down by 0.10% and falling below the 1.1700 level. This movement underscores a potential retest of crucial support areas as the US Dollar records its strongest week in four months, currently trading at 1.1688.

A risk-averse sentiment was ignited by US President Donald Trump, who is intensifying his focus on expanding tariffs not only to various countries but also to specific commodities such as copper. Reports have surfaced about his plans to impose comprehensive tariffs and his intentions to direct a tariff-related letter to the European Union (EU), marking its first weekly downturn in three weeks.

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

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

• The Euro faced downward pressure as Trump plans to dispatch a tariff-focused letter to the EU. Additionally, he implemented a 35% tariff on Canadian imports and is reportedly considering blanket tariffs of 15% to 20%, indicating a heightening of trade tensions.
• Chicago Fed President Austan Goolsbee, a future voter in 2025, commented that the new tariff measures complicate the assessment of true economic conditions. He suggested that these tariffs might postpone rate cuts as he prefers to wait for market anxieties to subside before confirming that the US is on course for a smooth economic landing.
• In Europe, ECB officials expressed varied views on monetary policy. Isabel Schnabel was notably hawkish, stating that a further rate cut is highly unlikely unless inflation significantly deviates from the ECB’s 2% target over the medium term—a scenario she currently sees no evidence for.
• Conversely, ECB’s Fabio Panetta showed a more dovish stance, noting that escalating downside risks to growth and increased disinflationary pressures might necessitate additional monetary easing.
• Germany’s Wholesale Prices increased by 0.2% MoM in June, rebounding from a 0.3% decrease in May. Annually, prices rose from 0.4% to 0.9% during the same period.

Technical Outlook for Euro: EUR/USD Dips Below 1.1700 with Potential to Reach 1.1500

The EUR/USD pair has broken below the 1.1700 level but remains above the 20-day Simple Moving Average (SMA) of 1.1662. Although it has rebounded to current price levels, remaining below 1.1700 suggests further potential for decline.

Immediate support lies at the 20-day SMA. If breached, the next targets are 1.1650 and then the 50-day SMA at 1.1464.