Insights 
VT 
During the mid-North American session on Friday, EUR/USD rebounded after initially dropping below 1.1300. This followed US President Donald Trump’s announcement of a 50% tariff on the EU starting June 1, 2025. The pair reached 1.1296 but soon rose to around 1.1350, as concerns over rising US fiscal deficits impacted the US Dollar.
US Treasury Secretary Scott Bessent criticised EU proposals, adding pressure on the US Dollar. The US tax bill, potentially adding $4 trillion to the debt over a decade, also weighed heavily. In contrast, the Euro found support from Germany’s improved GDP figures, which rose yearly even as they remained negative quarter-on-quarter.
Euro’s Momentum and Market Dynamics
US economic indicators were mixed; Building Permits declined, but New Home Sales increased, indicating persistent demand despite limited supply. EUR/USD technically maintains a positive trend, climbing to a two-week high of 1.1375. Surpassing 1.1400 could challenge resistance at 1.1450 and 1.1500. Conversely, a fall below 1.1300 could test the low of 1.1255 from May 22.
The Euro is gaining momentum as “sell America” sentiment prevails, with sell-offs in US bonds and equities amid trade tensions and a recent US debt downgrade.
At present, EUR/USD is exhibiting firm upward momentum, helped along by discontent around US fiscal policies and a rebalancing of global sentiment. The earlier dip below 1.1300 was momentary, evidently lacking the conviction required to initiate a downward leg. The sharp bounce back above 1.1350 suggests market participants weren’t ready to commit to a bearish stance—at least not with current dynamics at play. The upward push to 1.1375, a two-week high, acted as confirmation for that sentiment, reinforcing the idea that appetite for the Euro has emerged not merely as a reaction but as a sustained theme.
Trump’s tariff announcement scheduled for mid-2025, while dramatic, carries delayed implementation. Still, the psychological weighting of a future trade barrier has already started to impact capital flows. The pronounced reaction in US assets is a clear marker: investors are acting on tomorrow’s uncertainty today. Statements from Bessent, although political in tone, contributed to real implications. Markets responded directly with an increase in Euro bids precisely because of this feeling of instability surrounding American fiscal discipline.
At the same time, the Euro’s support has come not only from a diminished Dollar but also from relatively steady European data. German GDP might still be negative on a quarterly measure, but the YoY rise has offered a point of reassurance. Traders look for something — anything — to offset global concerns, and in this case, even modest improvement in one of the world’s key export economies has been enough to trigger rotation back into the common currency.
Watching Key Levels in Eur/Usd
Across the Atlantic, mixed housing data have done little to support the Greenback. Declining building permits suggest forward weakness in construction activity, while increased new home sales reflect stubborn demand meeting inadequate supply. These inconsistencies feed into a broader narrative that the US economy, while resilient, is approaching a tightening edge—where fiscal weight and interest rates begin to clash in unfriendly ways.
Price-wise, the 1.1400 level looks exposed. There’s a clear path toward testing 1.1450 or even 1.1500, if momentum sustains and US data continues to offer no support. On the other side, if 1.1300 breaks again and fails to reclaim, May’s 1.1255 low becomes swiftly relevant—particularly with macro pressure in play.
For those focused on interest rate divisions and policy divergence, this is no longer a single-variable market. We’re watching more than central bank communication now. There is a growing number of traders betting against US government securities, and they’re doing so at volume. This shift is not solely about domestic inflation or job prints anymore. The downgrade in US debt acted as a psychological trigger; it’s begun to reduce trust in long-term returns on US fixed-income instruments.
As generalised equity weakness continues in tandem with weakness in sovereign debt markets, the directional bias continues to favour currencies not directly exposed to these concerns. The Euro, despite its own hurdles, appears to be the bearer of fewer structural questions at the moment.
So, for now, watching 1.1375 and how price responds around 1.1400 is important. Any sustained move above that region deserves to be considered a continuation, not an overextension. On pullbacks, technical eyes will go immediately to the 50-day moving average—currently hovering just above 1.1300—which held as support recently and could do so again. We maintain that short-term directional trades should favour acceleration rather than reversal until a new catalyst emerges to disrupt the present balance.
