The EUR/USD pair is rising but in a low-volume environment, influenced by President Trump’s updates on taxes and tariffs. The US Dollar is losing strength due to concerns about debt and ongoing tariff threats, as EUR/USD nears the 1.1780 level. US markets are closed for Independence Day, which limits trading activity. The upcoming July 9 deadline for US trade tariffs is impacting currency movements.

Trump’s Tariff Strategy

Trump is considering new tariffs on several countries, with possible implementation starting August 1. These tariffs could vary between 10% and 70% and have already created tensions, especially with the EU. The proposed 10% global tariff on EU imports adds to the complexity of existing tariffs on aluminum and steel. Germany, heavily dependent on exports, could be at risk, especially regarding potential tariffs on its auto industry. Attention is also focused on the tax legislation referred to as the ‘Big, Beautiful Bill’, which is now with Trump for approval. This bill could increase the national deficit by $3.3 trillion over ten years and raise the debt ceiling by $5 trillion. From a technical perspective, the EUR/USD pair remains in an uptrend above key moving averages, facing resistance at 1.1800. The RSI suggests overbought conditions, indicating a possible short-term pause or pullback. Tariffs are aimed at improving local manufacturing competitiveness and are tools of protectionism in global trade.

Trade Tensions and Market Impact

As we enter July, the EUR/USD currency pair is inching higher despite low trading volume, mainly due to US markets being closed for Independence Day. It is nearing the 1.1800 level, which may be tough to break through shortly. The US Dollar is weakening primarily due to two factors: rising national debt and worries about tariff policies. Although there was initial support from previous tax reforms, expectations of a large fiscal deficit have dampened that momentum. Many investors fear that large debts could undermine confidence in dollar assets. As the July 9 trade tariff deadline approaches, pressure is mounting. This date could represent a new phase in the ongoing trade standoff. Policy announcements from the White House have shown they can significantly influence market direction. The new proposed tariffs, which range from 10% to 70%, especially those aimed at the EU, have increased market volatility. The potential for new duties on European cars is particularly concerning for Germany’s export sector, which relies heavily on auto manufacturing. If these tariffs are confirmed by August 1, we might see retaliatory measures from Europe, increasing uncertainty in foreign exchange and interest rate markets. The American tax proposal, dubbed the “Big, Beautiful Bill”, remains in focus. If it results in a $3.3 trillion increase in the deficit and raises the debt ceiling by $5 trillion, this could affect long-term Treasury yields and the dollar’s yield advantage. This could shift risk in medium-term positioning. On the charts, EUR/USD is still supported by its 50-day and 100-day moving averages. Traders who have bought the dips since late May have seen some gains, but the price is now close to a key resistance level. Technical indicators, especially the overbought RSI, suggest the upward movement may halt or retract slightly before another rally. We anticipate short-term momentum might decrease without fundamentally changing the overall upward trend, unless macroeconomic factors alter the market. Given these conditions, traders should stay alert. A light schedule for economic data, mixed with political news, means markets may react sharply to new announcements. While tariffs are not a new concept, the scale and frequency of proposed changes are surprising many market participants. These aren’t just theoretical shifts—they have real implications for pricing in rates, equity futures, and currency pairs. As we analyze these developments, attention will turn toward leading indicators, like import/export volumes and manufacturing sentiment surveys. These will help determine whether tariffs are harming competitiveness or if currency markets continue to be driven mainly by policy decisions. Create your live VT Markets account and start trading now.

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