EUR/USD extends losses as Trump threatens the European Union with 30% tariffs
- The Euro extends losses in risk-off markets as investors digest the 30% levies on products from the EU announced by Trump.
- Hopes of a trade deal between the EU and the US before the deadline on August 1 are keeping the Euro from depreciating further.
- EUR/USD keeps trading lower, with bears exploring fresh three-week lows below 1.1660.
The EUR/USD pair is trading lower in the early European session on Monday, weighed by a cautious market mood, following the latest round of tariff threats by US President Donald Trump, which included 30% levies on all European Union (EU) products starting from August 1.
The Euro (EUR) bounced up from three-week lows at the 1.1660 area at the start of the week, but it failed to find acceptance above the 1.1700 level and pulled back again, to hit fresh lows at 1.1655 at the time of writing. Looking at the trend since the beginning of the month, the pair has been trading within a bearish channel since peaking at a nearly four-year high at 1.1830 on July 1.
Markets have opened with a mild risk-off tone on the back of Trump's new round of tariffs, but the reaction so far has been more contained than that of April 2 Liberation Day. Traders seem to have assumed this new threat as a negotiating scheme rather than a final statement.
EU officials maintain their positive approach regarding the ongoing trade talks with Washington and remain hopeful of reaching a deal before the August deadline. The European Union has delayed any retaliatory tariffs, which has contributed to softening the impact on the Euro.
The economic calendar is practically void on Monday with news from the Eurogroup meeting and European Central Bank's (ECB) Cipollone speech, due in the European afternoon, likely to guide the Euro. In the US, the focus will be on Tuesday's Consumer Price Index (CPI) data from June, which might give further clues on the Federal Reserve's (Fed) easing calendar.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.03% | 0.21% | 0.12% | -0.04% | 0.04% | 0.31% | 0.01% | |
| EUR | -0.03% | 0.16% | 0.09% | -0.08% | -0.01% | 0.27% | -0.03% | |
| GBP | -0.21% | -0.16% | -0.14% | -0.24% | -0.16% | 0.11% | -0.05% | |
| JPY | -0.12% | -0.09% | 0.14% | -0.03% | -0.07% | 0.26% | -0.05% | |
| CAD | 0.04% | 0.08% | 0.24% | 0.03% | 0.06% | 0.35% | 0.05% | |
| AUD | -0.04% | 0.01% | 0.16% | 0.07% | -0.06% | 0.25% | -0.02% | |
| NZD | -0.31% | -0.27% | -0.11% | -0.26% | -0.35% | -0.25% | -0.30% | |
| CHF | -0.01% | 0.03% | 0.05% | 0.05% | -0.05% | 0.02% | 0.30% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: The Dollar appreciates on global trade woes
- The Euro remains on its back foot as global trade uncertainty weighs on investors' appetite for risk. A moderate risk-aversion is supporting the safe haven US Dollar so far, and the US Dollar Index – which measures the Dollar against six majors – keeps appreciating, moderately but steadily, from the multi-year lows hit in early July.
- On Friday, ECB's board member Fabio Panetta observed that downside risks to inflation have strengthened and affirmed that the central bank should keep easing its monetary policy, increasing bearish pressure on the common currency.
- Also on Friday, Chicago Fed President Austan Goldsbee warned that Trump's new tariff threats muddle the inflation outlook and make it more difficult for policymakers to support the rate cuts he is calling for.
- These comments did not stop the US President from continuing to pressure the Fed Chairman. Trump affirmed during the weekend that it would be a "great thing" if Powell stepped down, this time supported by the US Government's economic adviser, Kevin Hassett, who suggested that the president might be authorized to oust Powell due to the overrun costs of the bank's headquarters.
EUR/USD extends losses with 1.1660 support under pressure
EUR/USD continues trading lower within the descending channel from July 1highs. Upside attempts remain limited amid a moderate risk-off market, and technical indicators are pointing lower. The Relative Strength Index is low but still above oversold levels, which suggests that further depreciation is on the cards.
Price action has returned to the 1.1660 support area (July 10 and 12 low), which is being eroded at the time of writing. Below, the area between the 50% Fibonacci retracement of the late June bullish run, at 1.1640, and the bottom of the bearish channel from July 1 highs, at 1.1630, appears to be a significant technical floor ahead of the 1.6000 psychological level.
On the upside, immediate resistance is at the 1.1700 intraday high. Further up, there is the trendline resistance, now at 1.1730, and the July 10 high at 1.1740.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
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