Insights 
VT 
The EUR/USD pair sees an increase amid low trading volume, impacted by President Trump’s tax and tariff updates. The US Dollar’s gains diminish due to debt concerns and tariff threats, as EUR/USD approaches the 1.1780 level.
US markets are closed for Independence Day, contributing to limited liquidity. Renewed attention on the July 9 deadline for US trade tariffs is affecting the currency pair’s movement.
Trump’s Tariff Strategy
Trump plans new tariffs targeting various countries, with potential implementation as early as August 1. These tariffs range from 10% to 70%, stirring trade tensions, especially with the EU.
The introduction of a 10% EU global tariff adds complexity alongside existing aluminium and steel tariffs. Germany, reliant on exports, is particularly vulnerable due to potential auto-related tariffs.
Markets are attentive to the tax legislation, named the ‘Big, Beautiful Bill’, now heading to Trump’s desk. The bill could raise the national deficit by $3.3 trillion over ten years, with the debt ceiling rising by $5 trillion.
Technically, EUR/USD maintains an uptrend above key moving averages, with resistance at 1.1800. The RSI indicates overbought conditions, hinting at possible short-term consolidation.
Tariffs are levied to boost local manufacturing competitiveness, serving as tools of protectionism within international trade.
Trade Tensions and Market Impact
As we move through the early part of July, the EUR/USD currency pair is nudging higher, even though trading volumes remain subdued. That’s linked to the US markets being closed for Independence Day, draining liquidity across the board. Still, the pair is edging toward the 1.1800 region, a level that may prove difficult to surpass in the short term.
The recent weakness in the US Dollar follows two primary concerns: rising national debt and lingering anxiety surrounding tariff policy. While there was some upward momentum following previous tax reforms, that support is now undermined by the expectation of a substantial fiscal deficit. There is a perception that excessive borrowing may undercut investor confidence in dollar-denominated assets.
Pressure continues to mount ahead of the July 9 trade tariff deadline. That date could mark the next phase in the current trade standoff. Traders have already seen how policy announcements from the White House can jolt market direction. The threat of completely new tariffs ranging from 10% to 70%—including those aimed at the EU—has heightened short-term volatility.
In particular, the possibility of fresh duties on European vehicles is already weighing on the German export sector. This is an economy where auto manufacturing underpins broader industrial activity. If these measures are confirmed and rolled out by August 1, we may see retaliatory action from Brussels, likely leading to a rise in uncertainty across FX and rate markets.
The American tax bill, which has been dubbed the “Big, Beautiful Bill”, continues to draw attention. If it leads to a $3.3 trillion rise in the deficit, with the debt ceiling expanding by an additional $5 trillion, the implication for long-term Treasury yields and the Dollar’s real yield advantage cannot be ignored. From our view, that shifts medium-term positioning risk.
Chart-wise, the EUR/USD pair is still supported by its 50-day and 100-day moving averages. Those buying into dips since late May have found some reward, but the price now sits quite close to a meaningful resistance point. Technical readings, especially the overbought RSI, suggest the ascent could stall or retrace slightly before any fresh rally develops. We expect short-term momentum to soften without fundamentally changing the broader upward trajectory—provided macro triggers don’t skew the market otherwise.
Given these dynamics, traders will need to remain agile. A data-light calendar, combined with political headlines, means markets could whipsaw with every new announcement. Protectionist tools like tariffs are not new, though the scale and frequency of proposed changes are catching many participants off guard. These are not broad theoretical shifts but matter deeply for pricing in rates, equity futures, and currency pairs.
As we process these developments, emphasis will shift toward reading forward-looking indicators, such as import/export volumes and manufacturing sentiment surveys. These will help assess whether tariffs are biting into competitiveness or if FX markets are still largely policy-driven.
