EUR/USD Slides to $1.1777 as U.S. Jobs Surge and Trade Tensions Escalate
With Nonfarm Payrolls jumping 147K and tariff threats looming, EUR/USD faces volatility near key support at $1.1746 — upside capped at $1.1852 | That's TradingNEWS
EUR/USD Battles Crosswinds from Tariff Fears and US Job Resilience
Tariff Countdown Heightens Eurozone Risk Exposure
The EUR/USD exchange rate is caught in a volatile tug-of-war as the July 9 tariff deadline looms over transatlantic trade relations. With negotiations between the U.S. and the Eurozone stalling, no trade agreement has emerged. If new tariffs are imposed on European exports, investor sentiment toward the euro could deteriorate sharply. Such a development may signal bearish momentum for EUR/USD, especially given already fragile eurozone economic indicators. The lack of policy clarity has traders reluctant to commit heavily to long EUR/USD positions. U.S. President Donald Trump’s newly passed $3.4 trillion fiscal bill adds complexity, introducing potential inflationary pressure through spending boosts while dampening foreign appetite for U.S. cooperation.
U.S. Labor Market Delivers Blow to Euro Bulls
The dollar strengthened after a surprisingly strong U.S. labor market report, which showed 147,000 new jobs in June versus expectations of 110,000. This followed a revised 144,000 gain in May and pushed the unemployment rate down to 4.1% from an estimated 4.3%. Weekly jobless claims also beat estimates, dipping to 233,000. Meanwhile, wage growth slowed to 0.2%, easing some inflation pressure. The robust NFP print helped solidify the Fed’s wait-and-see stance, reinforcing expectations that rate cuts would be delayed, giving the dollar additional strength and pressuring EUR/USD lower.
Technical Correction in EUR/USD Signals Possible Support at 1.1710
After peaking earlier in the week, EUR/USD dropped to a three-day low of 1.1716. RSI has exited overbought territory, and price action shows signs of profit-taking following previous bullish momentum. A drop below the short-term support of 1.1746 puts focus on the next key level at 1.1710, and further downside may expose the June 12 high at 1.1631. However, if EUR/USD climbs back above 1.1810, resistance at 1.1852 and 1.1889 may be tested. The confluence of horizontal and trendline support around 1.1720 remains a crucial battleground.
Eurozone PMIs Offer Mixed Outlook, Germany Lags Behind
Eurozone economic activity showed mild improvement with the HCOB Services PMI rising from 50.0 to 50.5, reflecting tepid but stabilizing business sentiment. Germany, however, remained a drag with its services PMI stuck in contraction at 49.7. ECB meeting minutes revealed internal divisions, with several policymakers opposing the recent rate cut, citing persistent inflation risks and economic uncertainty. These conflicting signals weaken conviction in the euro’s recovery and may keep EUR/USD range-bound near term.
US Dollar Index (DXY) Tests Reversal Despite Oversold Signals
The DXY hovered around 96.93 after briefly testing resistance at 97.42. The index remains below both the 50-EMA (96.94) and the 200-EMA (97.28), suggesting continued bearish pressure. However, signs of bullish divergence are emerging as RSI forms a higher low while price makes lower lows, indicating possible reversal potential. A sustained move above 97.42 could open the door to 97.76 and 98.13. On the downside, failure to hold 96.80 support could expose 96.10.
Fiscal Tailwinds, Rate Delay, and Tariff Anxiety Fuel Dollar Volatility
The macro backdrop favors the dollar near term. Passage of Trump’s $3.4 trillion package and better-than-expected PMI and jobs data have pushed Treasury yields higher, with the 10-year note climbing to 4.34%. Meanwhile, the Fed’s reluctance to cut rates in the face of ongoing inflation uncertainty supports the USD narrative. Yet global trade risk, particularly around U.S.-EU tariffs and strained relations with China, may cap further gains.
EUR/USD: Short-Term Vulnerability, Long-Term Uncertainty
At $1.1777, EUR/USD faces immediate resistance at the 50-EMA and short-term support at $1.1746. The broader technical trend remains fragile. A drop below $1.1710 could shift momentum further in favor of the dollar, while a break above $1.1810 is needed to reassert bullish control. The market is at a critical inflection point, driven by both technical exhaustion and macro dissonance.
BUY/SELL/HOLD VERDICT: Tactical SELL – Short-Term Downside Toward $1.1631
With trade uncertainty unresolved and U.S. macro data surprising to the upside, EUR/USD is exposed to near-term downside. If support at $1.1710 breaks, price could slide to $1.1631. However, a bullish resurgence above $1.1810 would challenge this view. Until then, risk favors downside retracement.
Rating: SELL (Short-Term) Breakout Trigger: Above $1.1810 Downside Target: $1.1631 Support Levels: $1.1710, $1.1631 Resistance Levels: $1.1810, $1.1852, $1.1889
