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07/07/25
30
EUR/USD Under Pressure as Trade Tensions and Geopolitical Uncertainty Persist
The EUR/USD currency pair remains under pressure at the start of the week, trading below the key level of 1.1750 amid a cautious and risk-averse trading environment. The prevailing sentiment in the markets is characterized by uncertainty surrounding trade negotiations between the European Union and the United States. Investors are hesitant, awaiting further clarity on whether a potential agreement could be reached soon. This cautious mood matches broader market behavior, with U.S. stock index futures showing modest declines, between 0.2% and 0.6%, reflecting investors’ wariness.
On the geopolitical front, the White House indicated that discussions with the EU are ongoing, expressing optimism over the possibility of a resolution. However, U.S. President Donald Trump signaled that tariffs could be implemented on countries with which no agreement is reached by July 9, with tariff rates to be announced by that date and set to take effect on August 1. These developments are contributing to the dollar’s strength, which is helping to maintain downward pressure on EUR/USD.
In economic news, Germany reported a 1.2% increase in industrial production for May, following a 1.6% decline in April. While the data exceeded expectations by avoiding a slowdown, it was insufficient to bolster the Euro amid the current geopolitical tensions. Given the lack of significant data releases, market sentiment and geopolitical developments are likely to continue influencing EUR/USD movements in the coming days.
Technical indicators point to continued bearish momentum, with the pair falling below its 20- and 50-period moving averages on the four-hour chart. The relative strength index also declined to around 40, signaling increased downside potential. Immediate support levels are identified near 1.1730, with further downside targets at approximately 1.1670 and 1.1640. Conversely, resistance levels are observed at around 1.1770, 1.1800, and 1.1830, should market sentiment shift favorably.
Overall, the outlook remains predominantly bearish unless optimism regarding trade negotiations rejuvenates market confidence and drives a reversal.
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