The euro recovered somewhat after hitting a near two-month low last Friday. However, despite encouraging news on the US tariff front, the currency pair EUR/USD has failed to gain strong momentum. The euro remains unable to climb above the key 0.8400 level. This resistance keeps the broader bearish trend intact for now.
Over the weekend, US President Donald Trump reassured investors by announcing a suspension of plans to impose 50% tariffs on all European Union (EU) imports. Following a “very good call” with European Commission President Ursula von der Leyen, Trump said the tariffs would be suspended until July 9. The pause is intended to allow both sides to negotiate a favorable trade deal.
Market Conditions and Upcoming Events
The UK market is closed for the spring bank holiday, which may lead to lighter trading volumes. In Europe, market participants will closely watch a speech by European Central Bank (ECB) President Christine Lagarde. Her comments are expected to provide clues on the ECB’s future monetary policy direction.
Technical Analysis: Bearish Trend Persists
From a technical perspective, EUR/USD is clearly in a downtrend. The pair has been forming lower highs and lower lows, with no clear signs of reversing the trend.
In late April, the pair confirmed a bearish head and shoulders pattern. It broke below the neckline at 0.8530 and subsequently moved below the 78.6% Fibonacci retracement level at 0.8400. This level is now acting as strong resistance.
If EUR/USD fails to break above the 0.8400–0.8420 range, downward pressure is likely to increase. The next support target is around 0.8325, which served as a low in late March to early April. This level also corresponds to the projected target based on the head and shoulders pattern.
Potential Upside Levels
On the upside, a successful break above 0.8400 could lead the euro toward resistance levels at 0.8465 and 0.8530. However, until that happens, bears remain in control.
In summary, the euro’s recovery remains weak despite positive developments on US-EU trade talks. Technical indicators continue to point to a bearish outlook, with key resistance at 0.8400 holding firm and support around 0.8325 in focus. Traders will watch closely for signals from ECB President Lagarde for further direction.
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