EUR/USD under seller control: The deal’s consequences could be severe

The EUR/USD pair tumbled to 1.1579 by Tuesday, marking its sharpest intraday decline since 6 November last year.

The euro’s plunge followed the announcement of a new trade agreement between the US and the European Union, which imposes a 15% tariff on most European goods – a move set to significantly benefit the American economy.

European leaders reacted fiercely. France condemned the deal as one-sided, while German Chancellor Merz warned of serious risks to domestic industry. In response, Donald Trump reiterated that countries unwilling to negotiate bilateral agreements could face tariffs of 15–20%, up from the 10% rate in April.

Attention now turns to the US Federal Reserve’s July meeting, which concludes on Wednesday evening. While no rate change is expected, traders will scrutinise signals of a potential September cut, especially amid mounting White House pressure and trade-related uncertainties.

Key US economic data due this week – including the Core PCE Price Index and Nonfarm Payrolls report – will offer further clues on inflation and the Fed’s policy trajectory.

Technical analysis: EUR/USD

H4 Chart:

The EUR/USD pair has been consolidating within a symmetrical triangle pattern, typically a reversal formation. The price has now broken below the 1.1590 support, approaching the pattern’s lower boundary. A confirmed breakdown could lead to a decline towards 1.1490, with 1.1200 as a potential medium-term target.

The MACD indicator reinforces this bearish outlook, with its signal line below zero and pointing sharply downward, suggesting sustained selling pressure.

H1 Chart:

On the hourly chart, the pair had been range-bound near 1.1645 before breaking lower, extending its downward move towards 1.1523. A pullback to retest 1.1645 (now as resistance) remains possible before any further downside.

Beyond that, the bearish trend is likely to resume, with 1.1490 acting as the next key support. The Stochastic oscillator aligns with this scenario, as its signal line is below 50 and is trending downward towards 20, indicating strengthening bearish momentum.

Conclusion

Sellers remain firmly in control, with fundamental and technical factors both favouring further downside. A break below 1.1590 could accelerate losses, while key US data and Fed rhetoric this week may dictate near-term volatility.