EUR/USD Climbs Off Lows as Market Cheers Tariff Verdict, Fed Bets Ease

Summary:

EUR/USD edges higher as US court ruling on tariffs boosts the dollar, but Eurozone data lags; technical setup hints at bullish continuation.

BUY EURUSD

Close Time

CLOSED

1.13600

Entry Price

1.15500

1.12000

1.15687 +0.00405 +0.35%

58.5

Pips

Profit

1.12000

1.14185

Exit Price

1.13600

Entry Price

1.15500

The euro is cautiously retracing losses against the US dollar on Thursday, recovering from an earlier slide to 1.1213 as global markets digest a consequential US court ruling that may reshape trade policy dynamics. At the time of writing, EUR/USD is trading modestly lower near 1.1285, bouncing from multi-day lows after a dramatic surge in the dollar during the Asian session.

Driving the dollar’s advance was a landmark ruling by the US Court of International Trade, which dealt a legal blow to the Trump administration’s signature trade tariffs. In a unanimous decision, a three-judge panel invalidated the so-called “Liberation Day” tariffs, asserting that the constitutional power to regulate foreign commerce lies squarely with Congress—not the executive branch.

The verdict jolted global markets, sparking renewed risk appetite. The US dollar surged, sending the US Dollar Index (DXY) back above the psychologically significant 100.00 level, its highest in ten days, now trading roughly 1.8% above last week’s lows. The rally has reverberated across global equities, lifting Asian and European bourses, with Wall Street futures indicating a strong open as investor optimism builds on the notion that tariff tensions may ease.

However, the relief may prove temporary. The Biden administration has already filed an appeal, likely initiating a drawn-out legal process. Nevertheless, for now, the positive tone has tempered the broader “Sell America” narrative that had gripped markets in recent weeks amid expectations for Federal Reserve policy easing.

Indeed, the shift in sentiment has rippled into rate markets. Fed rate-cut bets are being dialed back, with futures now pricing in approximately 42 basis points of easing for the remainder of the year—down from the 50 bps anticipated just days earlier. Investors appear to be reassessing the Fed’s reaction function, especially after minutes from the central bank’s latest policy meeting highlighted concerns about stagflation—a scenario marked by both slowing growth and persistently high inflation.

While the dollar rally has been robust, the euro has not been entirely left behind. On the European front, Thursday brought a mix of macroeconomic signals. Better-than-expected Italian business and consumer confidence data helped cushion the euro’s fall, partially offsetting disappointing labor market numbers from France and Germany earlier in the week. Still, lingering economic fragility across the Eurozone remains a persistent headwind for any sustained euro recovery.

The fundamental calendar remains event-heavy. On Thursday, the second estimate of US Q1 GDP is due, with markets expecting confirmation of a 0.3% contraction—an abrupt slowdown from the 2.4% and 3.1% growth prints in the prior two quarters. Weekly jobless claims and appearances by multiple Fed officials will also provide further insight into the health of the labor market and policymakers' willingness to ease policy later this year. However, the week's marquee event remains Friday’s Personal Consumption Expenditures (PCE) Price Index—the Fed’s preferred inflation gauge—which could significantly sway rate expectations and market direction.

Technical Analysis

From a technical standpoint, EUR/USD is beginning to show signs of a bullish continuation, following a rebound from key support and a break above an ascending triangle formation on the 4-hour chart. The pair has climbed above a major resistance zone near 1.1300, validated by a strong bullish candlestick pattern. It is now trading around 1.1371—marking an encouraging step for euro bulls.

The Relative Strength Index (RSI) is also trending higher, reflecting growing upward momentum and investor confidence in the breakout. This technical setup aligns with a classic ascending triangle structure—a bullish formation typically signaling the resumption of an uptrend.

The ideal entry zone for traders was around the breakout point between 1.1300 and 1.1320, where the euro breached prior resistance and began establishing new support. The next major target for this move lies near the 1.1550 area—previously tested highs that represent a logical point for profit-taking, based on the pattern’s projected height added to the breakout level.

Price action remains well-supported by a rising cloud base and an ascending channel structure, which adds further confluence to the bullish case. Should the pair maintain its position above the 1.1300 breakout zone, the path toward 1.1500 remains viable. Traders managing risk could consider placing a stop-loss below the recent swing low or the lower boundary of the cloud, around 1.1250–1.1270.

TRADE RECOMMENDATION

BUY EURUSD

ENTRY PRICE: 1.1360

STOP LOSS: 1.1200

TAKE PROFIT: 1.1550

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EUR/USD Climbs Off Lows as Market Cheers Tariff Verdict, Fed Bets Ease

Risk Disclosure