EUR/USD Slammed to 1.1760 as Tariff Shock and Fed Shift Boost Dollar

EUR/USD Slammed by Tariff Chaos, Fed Doubt, and Mixed Eurozone Data

Bearish Momentum Mounts as EUR/USD Cracks Below 1.1760 Despite German Strength

The EUR/USD pair is under pressure as market anxiety mounts ahead of Trump's revived tariff timeline and a less dovish Fed stance. While Germany's Industrial Production posted a surprise +1.2% MoM in May (vs. 0.0% expected), the euro has failed to gain traction. Investors are pricing in heightened risk-off sentiment amid threats of 10% tariffs on BRICS-aligned countries, which has strengthened the dollar and dragged the euro into a steep retracement.

U.S. Treasury Secretary Scott Bessent confirmed that tariff letters will be sent this week, with August 1 set as the trigger date for possible new levies. The U.S. Dollar Index (DXY) is climbing toward 97.42, backed by a breakout above 97.11 and a rising yield curve. Treasury yields are being supported by stronger labor market data and Trump’s expansive new tax proposal, dubbed the "Big Beautiful Bill," which is stoking fiscal and monetary divergence with the ECB.

Fed Cuts on Hold: EUR/USD Suffers as Rate Gap Remains Unchanged

Data out of the U.S. delivered a hawkish blow to rate cut expectations. The labor market surprised to the upside, with 147,000 new private payrolls in June, crushing the 110K forecast. The unemployment rate fell to 4.1% from 4.2%, and now futures markets see less than a 5% chance of a July Fed cut, with even September expectations dropping to 70% from 95%.

This has forced the euro to give up bullish ground it had gained last week. The EUR/USD pair fell back to 1.1765 after reaching 1.1830, and technical indicators now signal deeper downside. RSI dropped below 50, MACD is in a bearish crossover, and Bollinger Bands are tightening toward a downside breakout. The 100-day EMA near 1.1763 is now being tested. A clean break could open the door to 1.1710, 1.1680, and even 1.1631.

Retail Sales Miss and Confidence Wanes – Eurozone Demand Weakens

Retail sales across the Eurozone contracted by -0.7% MoM in May, reinforcing signs of consumer strain. While the year-on-year figure showed +1.8% YoY (vs. 1.2% expected), it wasn’t enough to offset the downward momentum. The Sentix Investor Confidence Index and Services PMI across core economies remain soft, suggesting that growth is failing to provide a euro tailwind.

Even with upbeat German IP and a rebound in April's revised retail figure to +0.3%, markets are more focused on the risk of U.S. tariffs and geopolitical instability. Trump’s trade moves—especially targeted against BRICS and non-cooperative partners—have triggered haven demand for the dollar. Meanwhile, ECB guidance remains data-dependent, and investors are doubting the bloc’s ability to shield itself from external shocks.

Technical Breakdown Looms: EUR/USD Fails to Hold Bullish Structure

From a technical standpoint, EUR/USD is no longer defending bullish territory. It’s fallen beneath its 4-hour ascending trendline, broken below short-term support at 1.1765, and risks a retest of 1.1710 and 1.1680. The Stochastic RSI is in decline, MACD histogram shows growing red bars, and the daily chart is forming a bearish engulfing candle.

On the upside, bulls must reclaim 1.1790 and break 1.1830 to nullify the bearish setup. However, sustained USD strength and waning rate cut hopes are unlikely to permit this without a major catalyst.

Trade Wars Back in Focus: BRICS Tariffs, Eurozone Exposed

Trump’s declaration of punitive tariffs against BRICS allies has resurrected global trade tension. Countries like Germany and France are particularly vulnerable due to export dependency. With only three countries (China, UK, Vietnam) having closed U.S. trade deals post-moratorium, most of the Eurozone remains in limbo.

Commerce Secretary Lutnick’s signal that trade talks must conclude by July 9, or face an August 1 tariff reset, has injected urgency into the narrative. While Trump’s rhetoric is stirring growth expectations in the U.S., for the eurozone, it’s a net negative. The EUR/USD pair is reflecting this asymmetry in fundamental outlook.

EUR/USD Verdict: HOLD – Downside Risks Mount, But Tariff Outcome Still Fluid

Despite strong German data and some improvement in retail metrics, the EUR/USD is vulnerable to further downside as tariff fears, resilient U.S. data, and Fed hawkishness shift flows into the dollar. Support levels at 1.1710, 1.1680, and 1.1631 are now the line of defense for the euro, while resistance at 1.1790 and 1.1830 must be cleared to restore upside.

Until the U.S. clarifies tariff terms and Fed signals shift, EUR/USD should be treated as a tactical HOLD with a bearish tilt. Bulls must wait for a catalyst above 1.1830 to reclaim the initiative.

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