EUR/USD price climbs toward $1.14 after tariff delay announcement despite weak Eurozone outlook
EUR/USD rises after Trump delays tariff, but Eurozone economic fragility persists
The euro surged to its strongest level in about a month, pushing toward $1.14, after U.S. President Donald Trump announced a delay in the planned 50% tariff on EU imports. The tariff was initially scheduled to take effect on June 1 following a series of tough trade talks, but after a phone call with European Commission President Ursula von der Leyen, Trump extended the trade negotiations until July 9. This development temporarily reduced the tariff from 20% to 10%, offering some relief to the Eurozone.
Highlights
- EUR/USD rises toward $1.14 after Trump delays tariff implementation.
- Key resistance at $1.1437 with potential for a breakout.
- Eurozone faces economic fragility, with PMI data showing contraction.
Despite the positive news regarding the tariff delay, the Eurozone’s economic outlook continues to deteriorate. The European Commission (EC) has revised its 2024 growth forecast down to just 0.9%. PMI data for May also revealed that the Eurozone’s private sector activity unexpectedly contracted, driven primarily by a decline in the services sector and weak domestic demand. While the tariff delay offers temporary relief, the broader economic challenges in the Eurozone persist.
EUR/USD price forecast (April 2025 - May 2025) Source: TradingView.
Technical analysis: EUR/USD poised for a breakout or consolidation
On the 4-hour chart, EUR/USD is testing the upper boundary of a rising channel, currently trading at $1.1382. The price is approaching a key resistance at $1.1437, which will be crucial in determining whether the euro can sustain its upward momentum. The pair is supported by both the 50-period EMA at $1.12925 and the 200-period EMA at $1.12212, signaling strong bullish sentiment.
If the breakout above $1.1437 materializes, traders are eyeing a move toward $1.1526. However, if resistance holds, the pair may continue to consolidate within the channel.
As mentioned in previous discussions, the economic fragility in the Eurozone continues to weigh on the euro’s broader outlook. While the tariff delay offers short-term support, traders should be cautious of potential volatility as the market waits for further developments on the trade front and the ECB’s monetary policy stance.
