The dollar wobbles, Trump talks tariffs, and the euro’s got its dancing shoes on.
The Euro Wakes Up, Stretching Its Legs at $1.16
Look who just rolled out of bed and decided to make a scene.
For the first time in four years, the euro has finally leapt out of its slumber and sprinted to $1.16 — all at the expense of the US dollar, which continues to shed value.
The
EURUSD isn’t just crawling higher. It’s flexing, fueled by dollar fatigue, political drama, and some very European stubbornness.
So what’s behind the move? Why is the euro soaring while the European Central Bank is actually cutting rates? And what’s the dollar doing? Let's unpack it all — one central bank, one tweet, and one inflation print at a time.
Trump’s Tariff Ping-Pong: Back On, Back Off
Let’s start with the one thing that never quite leaves the headlines: Trump’s trade policy.
Just when traders were catching their breath after some tariff reprieve on China, the market got pulled back into the mess. “WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT,” Trump posted on Truth Social late on Wednesday, reigniting fears that the trade war is getting heated up again. Especially after a US squad of negotiators touched down in London and walked away with some promising news.
Markets don’t love confusion. Investors especially don’t love a US trade policy that changes faster than the Nasdaq
IXIC during CPI week. This kind of noise erodes confidence in US economic leadership and — more importantly — in the dollar.
The world’s most important currency is starting to feel… less important, less relevant, and less reliable. And while it’s not collapsing, it’s definitely catching fewer friends at the FX party.
On the other side of the pond, the euro isn’t rising because Europe is crushing it (even though it’s doing pretty well against rival currencies, just check the forex heatmap) — it’s rising because the dollar is slipping off its pedestal. So yes, the euro’s up. But this isn’t a standing ovation for Europe — it’s more of a polite shrug away from America.
US Inflation Creeps Higher — And That Means a Cut?
US inflation picked up to 2.4% in May but still left the door open for a cut by the Federal Reserve.
So what does the market do? It prices in a cut.
Lower rates mean lower yields on Treasuries, which means less incentive for global investors to hold dollars. And when the yield game turns dull, guess what gets more attention? Gold
XAUUSD — because if your asset doesn’t yield anything, at least let it be shiny.
ECB Cuts Again, and the Euro Still Rises?
Now here’s the riddle. The ECB last week cut its benchmark rate to 2%, hitting a two-year low. By all textbook logic, a rate cut should weaken the local currency.
Here’s why it’s rising instead:
Technicals: This Isn’t a Flash in the Pan
From a chartist’s perspective, theEURUSD breakout above $1.16 was a big deal. That level had acted as resistance since November 2021. Now cleared, a flurry of algo buys and retail FOMO might fuel the next leg in either direction.
From the bulls’ perspective, momentum is picking up, and the euro looks poised to test $1.17–$1.18 if the dollar stays fragile (that said, keep your eye on any hot news coming out of the economic calendar). RSI is not yet flashing overbought, and MACD is still screaming “more grounds to cover.”
Question is: How long can the euro dance before the music changes? And we’re asking you — share your thoughts on the euro-dollar pair and let’s see who gets it right!
The Euro Wakes Up, Stretching Its Legs at $1.16
Look who just rolled out of bed and decided to make a scene.
For the first time in four years, the euro has finally leapt out of its slumber and sprinted to $1.16 — all at the expense of the US dollar, which continues to shed value.
The
EURUSD isn’t just crawling higher. It’s flexing, fueled by dollar fatigue, political drama, and some very European stubbornness.So what’s behind the move? Why is the euro soaring while the European Central Bank is actually cutting rates? And what’s the dollar doing? Let's unpack it all — one central bank, one tweet, and one inflation print at a time.
Trump’s Tariff Ping-Pong: Back On, Back Off
Let’s start with the one thing that never quite leaves the headlines: Trump’s trade policy.
Just when traders were catching their breath after some tariff reprieve on China, the market got pulled back into the mess. “WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT,” Trump posted on Truth Social late on Wednesday, reigniting fears that the trade war is getting heated up again. Especially after a US squad of negotiators touched down in London and walked away with some promising news.
Markets don’t love confusion. Investors especially don’t love a US trade policy that changes faster than the Nasdaq
IXIC during CPI week. This kind of noise erodes confidence in US economic leadership and — more importantly — in the dollar.The world’s most important currency is starting to feel… less important, less relevant, and less reliable. And while it’s not collapsing, it’s definitely catching fewer friends at the FX party.
On the other side of the pond, the euro isn’t rising because Europe is crushing it (even though it’s doing pretty well against rival currencies, just check the forex heatmap) — it’s rising because the dollar is slipping off its pedestal. So yes, the euro’s up. But this isn’t a standing ovation for Europe — it’s more of a polite shrug away from America.
US Inflation Creeps Higher — And That Means a Cut?
US inflation picked up to 2.4% in May but still left the door open for a cut by the Federal Reserve.
So what does the market do? It prices in a cut.
Lower rates mean lower yields on Treasuries, which means less incentive for global investors to hold dollars. And when the yield game turns dull, guess what gets more attention? Gold
XAUUSD — because if your asset doesn’t yield anything, at least let it be shiny.ECB Cuts Again, and the Euro Still Rises?
Now here’s the riddle. The ECB last week cut its benchmark rate to 2%, hitting a two-year low. By all textbook logic, a rate cut should weaken the local currency.
Here’s why it’s rising instead:
- Markets are forward-looking. The rate cut was expected and already priced in. What matters now is whether more cuts are coming (spoiler: not too many). Traders are betting the ECB is nearing the end of its easing cycle — and may turn neutral soon.
- The Fed looks more dovish. Rate differentials still matter. Even if the ECB is cutting, the Fed is expected to cut more over the next 12 months. That narrows the gap between euro and dollar yields, making the euro more attractive in relative terms.
- Eurozone data isn’t great — but it’s not falling apart either. While growth in the eurozone isn’t setting any records, it’s been just OK to support the currency. Inflation is cooling in line with ECB targets, unemployment remains low, and key sectors like manufacturing are showing signs of life.
Technicals: This Isn’t a Flash in the Pan
From a chartist’s perspective, the
EURUSD breakout above $1.16 was a big deal. That level had acted as resistance since November 2021. Now cleared, a flurry of algo buys and retail FOMO might fuel the next leg in either direction. From the bulls’ perspective, momentum is picking up, and the euro looks poised to test $1.17–$1.18 if the dollar stays fragile (that said, keep your eye on any hot news coming out of the economic calendar). RSI is not yet flashing overbought, and MACD is still screaming “more grounds to cover.”
Question is: How long can the euro dance before the music changes? And we’re asking you — share your thoughts on the euro-dollar pair and let’s see who gets it right!
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Share TradingView with a friend:
tradingview.com/share-your-love/
Read more about the new tools and features we're building for you: tradingview.com/blog/en/
tradingview.com/share-your-love/
Read more about the new tools and features we're building for you: tradingview.com/blog/en/
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.