- EUR/USD trades cautiously as US President Trump has imposed 30% tariffs on imports from the EU.
- EU Von Der Leyen warns of proportionate countermeasures to safeguard bloc’s interest.
- This week, the US CPI data for June will be the key trigger for the US Dollar.
The EUR/USD pair trades with caution around 1.1670 during the Asian trading session on Monday. The major currency pair faces selling pressure as the Euro (EUR) slightly underperforms its peers, following the imposition of 30% tariffs by United States (US) President Donald Trump on imports from the European Union (EU), which will become effective from the August 1.
Alongwith EU, Mexico has also received letter from the US, specifying 30% tariffs, alongwith threat to increase the same if the nation retaliates or considers countermeasures.
Meanwhile, EU President Ursula von der Leyen has stated that his team continues to negotiate trade terms with Washington and has expressed confidence that the 27-nations bloc will strike a deal before the August 1 deadline. However, she has warned that the trading bloc could announce proportionate countermeasures, if required, to safeguard its interest.
In the US, investors await the Consumer Price Index (CPI) data for June, which will be released on Tuesday. The inflation data will significantly influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook. Economists expect US inflationary pressures to have grown at a faster pace in June.
EUR/USD corrects to near the upward-sloping trendline plotted from the February 25 low of 1.0360 plotted on the daily timeframe. The 20-day Exponential Moving Average (EMA) continues to provide support to the pair around 1.1660.
The 14-day Relative Strength Index (RSI) slides into the 40.00-60.00 range, suggesting that the bullish momentum has faded. However, the bullish bias is intact.
Going forward, the pair could enter a bearish trajectory and slides toward the June 23 low of 1.1454 and the round-level support of 1.1400, if it breaks below the June 24 low of 1.1573.
On the flip side, an upside move by the pair above the July 1 high of 1.1830 will open the door towards the round-level figure of 1.1900, followed by the psychological resistance of 1.2000
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