Trade Tensions Intensify: US Tariffs Trigger EU Response
Following President Trump's announcement of a 30% tariff on European imports set to activate on August 1, the EU has prepared substantial countermeasures. Trump emphasized tariff rates could adjust downward if Europe implements reciprocal measures. EU Commission President Ursula von der Leyen, seeking resolution ahead of the August deadline, has detailed two sanction packages: one targeting approximately €21 billion of American goods and another potentially affecting up to €72 billion worth.
Investors remain cautious, factoring in this critical trade conflict between two major global economies that could significantly impact currency volatility and broader economic outlooks.
Upcoming Economic Indicators: Inflation and ZEW Survey Awaited
On Monday at 09:00 (GMT+2), Spanish June inflation data is expected to show CPI rising monthly from 0.1% to 0.6%, with annual CPI steady at 2.2%. Harmonized CPI will likely increase to 0.6% monthly and 2.2% annually. Furthermore, the July Economic Sentiment Index from Germany's ZEW Institute, considered a key predictor of business and economic conditions, is anticipated to rise to 37.8 from June's 35.3, reflecting moderate optimism despite prevailing uncertainties.
US CPI Data Could Reinforce Fed's Hawkish Stance
Key US economic data releases are scheduled for 14:30 (GMT+2) with market forecasts suggesting monthly CPI accelerating from 0.1% to 0.3%, and annual CPI climbing from 2.4% to 2.6%. Core inflation data, crucial for monetary policy considerations, is similarly expected to strengthen from 0.1% to 0.3% monthly, and from 2.8% to 2.9% annually. These figures may reinforce the Fed's justification for maintaining elevated interest rates, despite increasing political pressures from the Trump administration advocating monetary easing.
Technical Analysis: EUR/USD Key Levels and Indicators
The daily chart signals market indecision, with Bollinger Bands converging, reflecting declining volatility. The MACD indicator maintains a solid sell signal below its signal line, while Stochastic hovers around the oversold threshold of "20," hinting at potential short-term corrections upwards.
- Resistance Levels: 1.1700, 1.1754, 1.1800, 1.1850
- Support Levels: 1.1631, 1.1579, 1.1534, 1.1500
Trade Recommendations and Scenarios
For short-term strategies, initiate a SELL STOP at 1.1630, targeting 1.1534 with a Stop Loss at 1.1680. Time horizon: 2–3 days.
An alternative bullish scenario: set a BUY STOP order at 1.1705, targeting 1.1800 with a Stop Loss at 1.1650, anticipating a breakout above resistance.