EUR/USD Trapped at 1.1718 as Dollar Gains, Tariffs and Fed Risks Mount
Euro fails to rally despite German trade beat, with technicals pointing to breakdown unless 1.1784 is cleared | That's TradingNEWS
EUR/USD Price Fights to Hold 1.1718 as Tariff Threats and Fed Path Dominate Market Structure
Eurozone Data Fails to Spark Recovery While U.S. Dollar Recovers Ground
EUR/USD hovered near 1.1718 on Tuesday, stuck in a volatile pattern despite an 18.4B euro German trade surplus and a 1.2% rebound in German industrial production. The pair remains subdued as investor focus shifts away from European fundamentals toward global macro risk. U.S. trade policy continues to dominate market sentiment, with the euro failing to capitalize on regional economic data. The French trade deficit stood at €7.7B, while Eurozone retail sales fell 0.7%, the steepest drop in nearly two years. These conflicting signals are not enough to dislodge the broader bearish bias weighing on the common currency.
Trump’s 25–40% Tariff Blitz and BRICS Threats Hammer Sentiment
EUR/USD has become a casualty of mounting global trade friction. President Trump’s latest salvo of tariffs—ranging from 25% to 40%—target nations such as Japan, South Korea, Malaysia, and South Africa, starting August 1. In parallel, Trump warned of a 10% penalty for countries supporting BRICS-aligned policies. While the Eurozone was excluded from this round, the proximity of European exporters to global value chains introduces risk. Negotiations between Brussels and Washington have reportedly made progress, but until a deal is formalized, risk premiums remain elevated.
Fed Rate Expectations Realign: July Odds Collapse, September in Focus
The U.S. jobs report last week came in hot, with 147,000 new private jobs and unemployment down to 4.1%, better than the 4.3% forecast. As a result, July rate cut odds collapsed below 5%, compared to 20% earlier. September cut odds now sit at 68%, down from 95%. The realignment has fueled a renewed bid in the dollar, putting EUR/USD under consistent pressure. With FOMC minutes due Wednesday, markets are bracing for confirmation of hawkish dissent among Fed officials. A dovish surprise would offer the euro temporary relief, but current sentiment favors continued dollar strength.
Technical Friction Builds Near 1.1718 Amid Wedge and Triangle Formations
EUR/USD trades within two overlapping formations: an expanding wedge and a symmetrical triangle, adding noise to the short-term trend. Price is capped below the 1.1765 resistance, now aligned with the 50-SMA, while key support rests at 1.1687, the lower boundary of the triangle. The RSI at 41.60 reflects weak momentum, and no bullish divergence is visible. Breakout zones include 1.1784 on the upside, which aligns with a descending trendline from June highs, and 1.1650 to the downside, a confluence of Fibonacci retracements and prior support zones.
Intraday Levels to Watch and Trade Parameters
Traders are watching 1.1765 → 1.1808 → 1.1846 → 1.1891 for resistance and 1.1687 → 1.1641 → 1.1590 for support. The 50-EMA and 200-EMA sit at 1.1746 and 1.1728 respectively, now acting as intraday pivot zones. The MACD shows the signal line below zero, reinforcing bearish bias. Short trades remain viable below 1.1685 on volume, with targets between 50–80 pips, while bullish scenarios only activate above 1.1784 with close confirmation.
Geopolitical Premium Still Backs the Dollar
Even with the Eurozone shielded from immediate tariff application, broader market nerves are evident. China’s response to Trump’s policies could ripple across European industries tied to global supply chains. EUR/USD’s failure to rally on Tuesday despite marginal improvements in risk sentiment highlights the pair’s fragility. As long as safe-haven flows persist and global trade structures are questioned, the euro may struggle to retake its footing above 1.1750.
Heatmap Divergence: Euro Weakens Against USD and Commodity FX
Cross-currency heatmaps show the euro underperforming against the U.S. dollar and most commodity-linked currencies. Notably, EUR/JPY posted the steepest daily loss as investors fled risk. The EUR/USD pair slipped from intraday highs near 1.1756 to settle at 1.1718, aligning with horizontal and trendline supports on both H1 and H4 charts. Bullish hopes now hinge on a close above 1.1780, with failure triggering deeper probes to 1.1650 and 1.1611.
Short-Term Forecast: Bearish Bias Persists with Breakout Setup Developing
Despite short bounces, the structure remains fragile. The H1 chart shows an upper cap at 1.1777, while support thickens around 1.1700, 1.1688, and 1.1650. A breakdown could push the pair toward 1.1611, extending downside toward 1.1570. The Stochastic oscillator confirms weakness with a drift toward the oversold zone.
