The EUR/USD currency pair experienced a decline of over 0.5% on Monday, reflecting an initial bearish trend. However, as market sentiment shifted towards optimism, the pair regained some momentum on Tuesday. The positive tone was largely driven by renewed hopes that the European Union and the United States could soon reach a trade agreement, alleviating some of the geopolitical uncertainties weighing on markets.
Meanwhile, developments in U.S. trade policy added to the market dynamics. President Donald Trump signed an executive order postponing the implementation of new tariffs until August 1. Additionally, the administration has communicated plans to impose higher tariffs on major trading partners, including Japan and South Korea. Reports indicated that the European Union was not among the countries singled out for tariff increases and might even secure an exemption from the 10% baseline tariffs, suggesting progress towards easing trade tensions. Sources close to the EU also noted that negotiations with the United States were advancing positively.
In the financial markets, U.S. stock futures traded modestly higher during Tuesday’s European session. Without significant economic data releases, the upward movement in Wall Street and a broader risk-on environment appeared to support the EURO against the dollar. However, the currency pair’s performance remains sensitive to shifts in risk appetite. A return to risk aversion could dampen the EURO ’s rally and weigh on EUR/USD .
Technical indicators point to waning bearish momentum for the EURO . The Relative Strength Index on the four-hour chart has risen to around 50, while the pair’s price action shows it fluctuating near key short-term moving averages, indicating a potential pause or consolidation phase.
Key resistance levels are identified at 1.1780, near the midpoint of an ascending channel, followed by 1.1830 and 1.1900. Support levels lie around 1.1720 and 1.1680, with additional support anticipated at 1.1650. The EURO remains a critical currency in the global forex market, second only to the dollar, accounting for approximately 31% of daily foreign exchange transactions. The European Central Bank’s monetary policy, particularly interest rate decisions aimed at maintaining price stability, continues to influence EURO strength. Elevated inflation data could prompt the ECB to consider rate hikes, potentially supporting the EURO further.
