The recent EU tariff reprieve was announced after a promising discussion between key leaders, potentially influenced by concerns over tariffs’ impact on US growth. European stocks have reacted positively, showing a 10% year-to-date increase compared to a 2% drop in the S&P.

The EUR/USD appears to be in a robust bullish trend, with spot gains reaching the low 1.14 area. Current support levels stand at 1.1325/50, while resistance is noted at 1.1460 and 1.1580/00.

Strong Start For Eur/Usd

The EUR/USD pair started the week strong, surpassing the 1.1400 level. Simultaneously, the US Dollar experienced a decline with the extension of the US-EU trade talk deadline.

Meanwhile, Bitcoin rose to over $109,000 amid improved market sentiment following the tariff delay. Gold, however, has seen gains capped at $3,350 per troy ounce, despite last week’s climb.

With the tariff deadline pushed further out, markets are factoring in reduced short-term tension across the Atlantic. From our side, equities in Europe appear to be feeding off this sense of reduced confrontation. A 10% gain year-to-date reflects that optimism, whereas US stocks have stepped back, weighed down perhaps by uncertainty around domestic demand.

Both technical and fundamental cues align to show strength in the euro. The EUR/USD pair has moved above the 1.1400 level, a clear technical threshold many had been eyeing. It is now trading closer to 1.1450, flirting with higher resistance around 1.1580. Below, the zone between 1.1325 and 1.1350 should now provide a floor, assuming macro conditions stay on course. The dollar’s retreat—partly influenced by dovish projections and geopolitics—adds fuel to this ascent.

Yields in Europe haven’t surged despite the rally in equities, indicating that equity strength remains disconnected from rate expectations for the time being. That is an interesting divergence. It may prompt traders to reassess implied volatility levels in euro-based cross assets. Particularly in front-end euro options, holding short gamma in the current environment feels exposed. It leaves little room for error if volatility picks up—especially heading into another round of inflation data or comments from policymakers.

Market Sentiment And Volatility

The bitcoin spike to over $109,000 underscores how quickly sentiment can reset. While the reasons may vary—a combination of broader liquidity conditions and tariff relief, perhaps—the move was sharp and surprising in pace. It indicates that risk appetite has returned, at least for now, across multiple asset classes. This could add pressure on traditional havens.

Gold, despite last week’s momentum, appears stuck. Resistance at around $3,350 per ounce has proven sticky. The fact it hasn’t pushed further despite the pullback in the dollar is telling. It might point to hesitation among institutional buyers, or simply a resting period after sizeable prior gains. Either way, for macro hedging purposes, we see its positioning as lighter than many had expected.

Heading into the next fortnight, options pricing across currencies and metals will need to catch up with price action. Any traders nursing short calls on EUR or long puts on XAU may want to revisit exposure—not necessarily close it, but definitely sharpen stops or build protective strategies. Adjustments in strike skew and implied vol should be read carefully; they will hint where the larger balance of risk is being priced in.

As the trade deadline extension filters through asset prices, currency vol can remain bid while equity vol decouples. That divergence can be traded. Leveraging relative volatility between FX and equity indices may offer selective opportunity, particularly using calendar spreads or vanna-based trades. Timing, as ever, needs to be spot on.

If the euro maintains its tone and resistance above 1.1460 breaks, the pace of repricing in interest rate differentials between Europe and the US might speed up. We’ve noticed yield spreads haven’t fully adjusted to this strength, which opens further room for short-term flow-driven dislocations. That kind of gap often leads to violent intraweek reversals.

The coming sessions offer rich ground for expression: structurally long euro with tight options on the downside, selectively long risk with metals underweighted near resistance, and dollar shorts with well-scoped exit strategies. Price action is giving clearer signals here—it’s time to act with precision, not hesitation.

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