Insights 
VT 
US China Agreement On Rare Earth Imports
The US and China have finalised an agreement on rare earth imports, promising improvements in economic ties. Furthermore, Canada has withdrawn the digital services tax, allowing trade negotiations with the US to resume.
Japan’s negotiators remain in the US, engaged in ongoing tariff discussions set to continue until September 1. Meanwhile, concerns about US debt levels, with expectations of an additional $3 trillion, weigh on the dollar.
The EUR/USD pair sustains its upward movement following a recent rally, with current resistance at 1.1745. Possible targets include the 161.8% Fibonacci extension at 1.1795, while support is observed at 1.1680.
The European Central Bank’s Christine Lagarde continues to influence the Euro’s trend with her policy outlooks. German CPI data, a key inflation measure, will further shape market expectations for the Euro.
Germany’s Consumer Outlook
With the Euro holding steady at elevated levels, bolstered by strides in trade diplomacy across the Atlantic and Asia alike, the current conditions firmly anchor sentiment in favour of the single currency. The EUR/USD pair grinding just beneath 1.1750 reveals a firm resistance zone, one that price action has repeatedly tested without decisively breaching. Despite that, upside pressure appears intact and technical momentum, combined with fundamental tailwinds, seems persistent—for now.
Behind this strength lies a layering of developments that collectively put downward pressure on the dollar. The recent US-China agreement on rare earth imports, for example, is a clear signal of improving dialogue. Notably, Canada’s shift away from the planned digital services tax not only appeased trade partners but efficiently cleared a political obstruction that could have dragged out cross-border tensions longer than necessary. These moves may reassure markets temporarily, but with debt concerns in the US looming large—expectations of another $3 trillion added—there is a growing sense that appetite for the greenback may remain restrained by structural imbalances and fiscal uncertainty.
Germany’s consumer outlook, however, is not without questions. The surprise undershoot in Retail Sales speaks to domestic weakness, challenging the assumption that the Eurozone economy will bounce cleanly through the second half of the year. Still, stronger-than-expected CPI data would offer a timely counterweight—raising inflation expectations in the bloc and in turn bolstering the case for policy action from the ECB, or at least guidance that shifts sentiment further toward hawkishness.
Lagarde’s consistent tone on inflation control leaves little ambiguity. Stability remains the priority, and while her commentary continues to prop up the Euro through expectations management, it should be monitored with attention—not just for tone, but for any subtle directional shift ahead of the ECB’s autumn messaging.
For directional traders, this environment offers defined levels. With resistance at 1.1745 and a Fibonacci extension target of 1.1795 acting as a ceiling, price is navigating a narrow corridor. We should continue to observe how aggressively buyers respond at pullbacks near 1.1680—any breach there invites a reassessment of momentum strength. Spreads tell part of the story, but so does positioning, particularly with speculative long interest appearing to grow.
Over in Washington, negotiations with Japan are extending through the summer. While tariff discussions can be prolonged and procedural, the simple fact that talks are ongoing is, in itself, enough to dampen volatility ahead of any formal announcement post-September. But between now and then, traders might find that policy uncertainty and ballooning debt combine to leave the dollar exposed to additional downside, especially if data continues to underperform or Fed signals turn slightly less hawkish.
From our perspective, the pricing of the Euro at these levels reflects a story that is not merely technical, but rooted in diverging fiscal and trade narratives. Watching for inflection points in bond yields or inflation readings on both sides of the Atlantic will be essential. These are not abstract indicators—they guide expectations, shape rate differentials, and can abruptly reprice forward-looking contracts. So while headline momentum may offer clarity, it’s the next few data prints—particularly from Germany and ECB communications—that are poised to play a decisive role in shaping near-term trading setups.
