In a significant turn of events on Tuesday, the EUR/USD currency pair witnessed a downturn, settling at 1.1746. This movement underscored a period where the US dollar demonstrated resilience, initially gaining a slight advantage over its counterparts before adjusting. The American currency’s fluctuation came on the heels of President Donald Trump’s announcement imposing new tariffs on a group of 14 countries. These nations, which are yet to ratify trade agreements with the United States, found themselves at the harsh end of a 25% duty charge on their exports, slated to commence from the 1st of August.
Major exporting economies such as Japan and South Korea are amongst those impacted by this stringent measure. Trump’s decision did not stop at the introduction of tariffs. He further extended an olive branch by signing an executive order which pushed the deadline for counter-tariffs from the originally planned 9th of July to the 1st of August. This gesture was ostensibly to allow additional time for dialogue and negotiation. Furthermore, amidst these escalations, Trump did not shy away from threatening an additional 10% tariff on countries he believes are aligning with an anti-American stance, encapsulated in the BRICS policy – a sentiment expressed during the bloc’s summit in Brazil.
Earlier in the week, the US dollar enjoyed a moment of strength as tensions around trade appeared to dissipate, and the Federal Reserve’s move towards monetary tightening seemed less imminent. A strong labour market report for June diluted expectations for an immediate easing of monetary policy, with market sentiment now veering away from anticipating a rate cut in July.
### Technical Analysis: EUR/USD
#### H4 Chart Analysis
On examining the four-hour chart of the EUR/USD pair, it was observed that the currency pair climbed to 1.1747, subsequently entering a consolidation phase around this level. Speculation suggests a potential surge reaching 1.1760, which could precede a retreat to the 1.1650 mark, delineating the current trading range. A breakout above this consolidation zone could propel the pair towards 1.1885. On the flip side, should the pair plummet below the baseline, it’s conceivable to anticipate a reduction reaching 1.1611, with the likelihood of further descending to 1.1570. The MACD indicator provides additional insight, with its signal line anchored below zero, highlighting a strong bearish momentum.
#### H1 Chart Analysis
The hourly chart reveals a concurrent consolidation around the 1.1717 mark, with projections pointing towards an uptick to 1.1777. Despite these bullish projections, the momentum appears to be waning, with a downward correction to 1.1700 imminent, potentially stretching to 1.1611. The Stochastic oscillator cements this analysis, indicating a descending trend with its signal line moving from 80 towards 20.
### Conclusion
The EUR/USD pairing is besieged by uncertainty stemming from the recent tariff impositions and a volatile outlook for Federal Reserves’ interest rate decisions. From a technical standpoint, the currency pair exhibits constrained potential for an upward trajectory, with crucial support pegged at the 1.1650 (H4) and 1.1611 (H1) marks. Any significant breach below these levels could hasten a decline, whereas an upward surge might hint at a temporary relief from the prevailing downtrend.
### Disclaimer
It is important to note that the above forecasts represent only the author’s viewpoint and should not be construed as investment advice. The responsibility for trading results based on these recommendations and reviews, as indicated by the RoboForex Analytical Department, lies solely with the investor.
This in-depth analysis situates itself amidst a backdrop of fluctuating economic policies and trade tensions, providing a comprehensive snapshot of the current fiscal atmosphere. The ongoing events underscore the intricate interplay between international trade agreements and their consequential impact on currency valuations, offering a glimpse into the complexities of the global economic landscape.
