Euro Rebounds from Three-Week Lows but Remains Under Pressure as Trump’s EU Tariffs Cloud Outlook

Traders' Opinions

Economic

Summary:

EUR/USD bounced higher in early European trading Monday, recovering from three-week lows, but the broader bearish trend remains intact amid investor unease following new 30% U.S.

BUY EURUSD

Close Time

CLOSED

1.17036

Entry Price

1.20000

1.16000

1.16549 +0.00123 +0.11%

103.6

Pips

Loss

1.16000

1.15994

Exit Price

1.17036

Entry Price

1.20000

The Euro staged a modest recovery against the U.S. Dollar on Monday, rebounding from a three-week low as European markets opened, but the move was far from a trend reversal. The EUR/USD pair gained ground during the early European session, trading up from 1.1655 to hover just below the 1.1700 handle. Despite the bounce, the broader outlook for the pair remains clouded by renewed trade tensions and a cautious global mood, particularly in light of aggressive new tariffs announced by the United States over the weekend.

U.S. President Donald Trump revealed plans to impose sweeping 30% levies on all European Union imports, escalating transatlantic trade tensions that had simmered since the previous round of negotiations in April. While markets opened with a relatively measured reaction—unlike the sharp moves seen earlier in the year—investor sentiment remained fragile, keeping the Euro on the defensive and weighing on broader risk appetite.

The new round of tariffs, though aggressive, is being interpreted by many traders as part of a high-stakes negotiation tactic rather than a final declaration of policy. This perception has somewhat cushioned the market reaction. The Euro’s downside was also mitigated by the European Union’s restrained response. Rather than retaliate immediately, Brussels opted for diplomacy, with EU Trade Commissioner Maros Sefcovic expressing optimism that a trade agreement with Washington could still be reached before the self-imposed August deadline.

Sefcovic’s remarks were seen as an attempt to de-escalate tensions and maintain the momentum of ongoing negotiations. This has provided a floor beneath the Euro, keeping the currency from sliding deeper despite the fundamentally bearish tilt in the near term. However, with trade rhetoric intensifying and no concrete deal on the table yet, investor caution prevails.

Monday’s economic calendar is light, with little in the way of tier-one data from either side of the Atlantic. Instead, the market's attention is fixed on political developments, including the Eurogroup meeting and a scheduled speech by ECB member Piero Cipollone, which may offer clues on the central bank’s evolving stance in a volatile global environment.

Across the Atlantic, eyes are firmly on Tuesday’s release of U.S. Consumer Price Index (CPI) data for June. With inflation trends playing a pivotal role in shaping the Federal Reserve’s policy path, any upside surprise in CPI could reinforce expectations for a delayed or more gradual easing cycle. That, in turn, would lend additional strength to the U.S. Dollar and challenge the Euro’s recovery attempts. Conversely, a softer inflation print could revive speculation of a dovish pivot, creating a temporary tailwind for EUR/USD.

Technical Analysis

From a technical perspective, EUR/USD is undergoing a healthy retracement after failing to sustain the bullish momentum that had lifted the pair to 1.1830 — a level not seen in nearly four years — earlier this month. Since then, price action has been confined within a well-defined descending channel, with the pair making lower highs and lower lows, a classic bearish pattern.

Monday’s bounce finds the Euro testing the mid-line of the longer-term ascending channel. The 1.16288 – 1.15774 zone, which once served as stiff resistance, now acts as a potential demand area. This support flip is a textbook structural pivot point, and its ability to hold will be key in determining whether the bullish undertone can reassert itself.

A convincing bounce from this zone could reignite upward momentum, setting the stage for a potential move back toward the 1.2000 psychological level over the coming weeks — assuming fundamental catalysts such as a trade resolution or soft U.S. inflation data emerge. However, a decisive break below the lower boundary of the demand zone and channel support would invalidate the bullish thesis and expose the pair to deeper losses, possibly toward 1.1500 and the 200-day EMA.

TRADE RECEOMMENDATION

BUY EURUSD

ENTRY PRICE: 1.1700

STOP LOSS: 1.1600

TAKE PROFIT :1.2000

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Eva Chen

Forex

Economic

Summary:

EURGBP extended its advance for a second straight session, trading near 0.8670 in Monday's European morning. Growing conviction that the Bank of England (BoE) will accelerate rate cuts—coupled with chatter of tax hikes to plug the fiscal deficit—has left sterling on the back foot and driven the cross to a three-month low against the euro.

BUY EURGBP

Close Time

CLOSED

0.86718

Entry Price

0.87960

0.84900

0.87463 +0.00147 +0.17%

68.8

Pips

Profit

0.84900

0.87406

Exit Price

0.86718

Entry Price

0.87960

Fundamentals

Market anxiety over the UK's macro policy mix is intensifying. Expectations of an earlier and steeper BoE easing cycle, alongside speculation of revenue-raising tax measures, continue to weigh on GBP. GBPEUR slid to 0.8670 Monday, matching the weakest print since early April.

BoE Governor Andrew Bailey said last week that a "material softening" in labour-market conditions could prompt the Monetary Policy Committee to adopt a more aggressive easing stance. Thursday's employment report is therefore pivotal: a downside surprise would cement market pricing for an August cut.

Compounding the gloom, May GDP printed below consensus and the fiscal shortfall is widening, fuelling bets that the Treasury will unveil tax increases in the Autumn Statement. If this week's data—employment on Tuesday and CPI on Wednesday—confirm a loss of momentum, EURGBP could clear 0.8670 and march toward the April peak at 0.8738.

Technical Set-Up Signals Rally Has Legs—Bulls Eye Three-Month Highs_1

Technical Analysis

After a multi-week base, EURGBP has rallied for two consecutive weeks, underpinned by a textbook inverse head-and-shoulders formation. Momentum indicators are aligned: RSI has broken above 60 and the MACD has flashed a bullish crossover, reinforcing the constructive outlook.

Over the near term, the pair retains a mildly bullish bias. A decisive break of the 0.8670 resistance would open room toward 0.8737. Initial support lies at 0.8573. If this level flips from resistance to support, it would solidify the upward trajectory.

Trading Recommendations

Trading Direction: Buy

Entry Price: 0.8640

Target Price: 0.8796

Stop Loss: 0.8490

Deadline: July 29, 2025, 23:55:00

Support: 0.8632/0.8596/0.8552

Resistance: 0.8694/0.8737/0.8767

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The Euro advanced against the Pound on Monday as soft UK GDP data and dovish rhetoric from Bank of England Governor Andrew Bailey weighed on Sterling.

BUY EURGBP

Close Time

CLOSED

0.86649

Entry Price

0.88000

0.86000

0.87463 +0.00147 +0.17%

9.8

Pips

Profit

0.86000

0.86747

Exit Price

0.86649

Entry Price

0.88000

The Euro (EUR) edged higher against the British Pound (GBP) on Monday, with the EUR/GBP currency pair climbing to fresh two-week highs around 0.8710 as investors reacted to a deteriorating economic outlook for the UK and growing speculation that the Bank of England (BoE) is preparing to ease policy more aggressively in the months ahead. The move reflects a broad reassessment of interest rate expectations, compounded by disappointing macro data and mounting signs of labor market softness in the UK economy.

The upward trajectory in EUR/GBP marks a continuation of the pair’s recent bullish bias, driven by renewed Sterling weakness rather than Euro strength per se. At the core of this week’s bearish sentiment on the Pound is the latest batch of UK economic indicators, which signal that Britain may be slipping into a period of stagnation — if not outright contraction — just as fiscal pressures and labor market frictions deepen.

According to figures published by the Office for National Statistics (ONS) on Friday, the UK economy shrank by 0.1% in May — following a sharper-than-expected 0.3% contraction in April. The downturn was broad-based, with declines in manufacturing output, industrial production, and construction activity all weighing heavily on headline GDP. Only the services sector posted a modest uptick, and even that was tepid.

The back-to-back monthly contractions have sparked fresh concerns that the UK may be entering a technical recession, defined as two consecutive quarters of negative growth. While the BoE has remained cautious in its economic assessments, the data is now forcing policymakers and markets alike to confront the risk of a deeper slowdown — one that might warrant faster or larger interest rate cuts.

Compounding Sterling’s woes was a candid interview from Bank of England Governor Andrew Bailey, who on Monday reiterated the central bank's intention to shift toward an easing cycle. Speaking with The Times, Bailey acknowledged the emergence of “slack” in the economy, partly due to increased employer national insurance contributions, which are starting to weigh on business confidence and hiring.

“I really do believe the path is downward,” Bailey said, referring to interest rates. He emphasized that any rate cuts would be delivered in a “gradual and careful” fashion — but also added that if economic slack materializes faster than expected, the BoE would not hesitate to act more decisively.

His remarks come at a pivotal moment for UK monetary policy. Recent surveys suggest the labor market — long considered a bulwark of resilience — is now beginning to cool rapidly. A KPMG-REC report released last week showed that permanent job placements fell at the sharpest rate in over two years, while staff availability rose at its fastest pace since 2020. Official data also revealed that unemployment ticked up to 4.6% in the three months to April, marking the highest level since the pandemic era.

With growth slipping and employment faltering, markets have become increasingly confident that the BoE will initiate its rate-cutting cycle as soon as the August meeting. As of Monday, swaps pricing implies a 90% probability of a 25 basis point cut next month, with markets anticipating a total of 75 basis points in easing over the next 12 months.

On the European side of the equation, the single currency has remained remarkably steady, even as the European Union faces simmering trade tensions with the United States. While no immediate trade measures have been enacted, the threat of retaliatory tariffs from the US remains on the radar, particularly as Washington reevaluates its industrial policy vis-à-vis Europe.

Despite this, the European Central Bank (ECB) has maintained a measured stance. ECB officials, including Governor François Villeroy de Galhau and Chief Economist Philip Lane, have repeatedly signaled that while further rate cuts are possible, they will proceed with caution given persistent inflation risks. Eurozone inflation, although moderating, remains sticky enough to warrant vigilance, and policymakers are wary of moving too quickly.

This divergence in central bank outlooks — with the BoE preparing to accelerate rate cuts while the ECB takes a more patient approach — continues to provide structural support for the Euro, especially against currencies like the Pound that are facing more acute domestic pressures.

Technical Analysis

From a technical standpoint, EUR/GBP remains in a well-defined uptrend, having broken above a key consolidation zone. The pair is currently testing immediate resistance near 0.8700 and appears set to challenge the psychologically significant 0.8715 level — a horizontal structure that has acted as both support and resistance in the past.

The broader technical landscape shows continued bullish momentum, with dips toward 0.8620 — the previous consolidation base — likely to be viewed as buying opportunities. A successful rebound from this support level would reinforce the bullish bias and could drive the pair toward the next upside target at 0.8740, where longer-term resistance comes into play.

Should the pair breach that level, a potential move toward 0.8780–0.8800 could materialize, especially if incoming UK data continues to disappoint or if dovish BoE rhetoric intensifies. Conversely, a failure to hold above 0.8620 would weaken the short-term bullish structure and open the door for a corrective pullback toward the 50-day moving average around 0.8550.

TRADE RECOMMENDATION

BUY EURGBP

ENTRY PRICE: 0.8665

STOP LOSS: 0.8600

TAKE PROFIT: 0.8800

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Economic

Summary:

Gold prices remained locked in a high-level consolidation range Monday as the market split into two camps. Several institutional investors continue to champion gold's medium- to long-term bull case, while a growing contingent argues that near-term upside momentum is fading and a wide-swing trading phase is likely ahead.

BUY XAUUSD

Close Time

CLOSED

3360.63

Entry Price

3429.00

3229.00

4209.68 +11.77 +0.28%

59.7

Pips

Profit

3229.00

3366.60

Exit Price

3360.63

Entry Price

3429.00