empty
26.06.2025 12:42 AM
The Dollar Walks a Razor's Edge

Markets were prepared for a ceasefire in the Middle East. But are they ready for the return of trade wars? Investors have come to believe in maintaining a universal import tariff without reverting to country-specific ones. A 10% rate is already significant, but the global economy is gradually adjusting to the U.S. levies. What if Donald Trump surprises everyone in early July by sharply raising the stakes? This uncertainty is preventing EUR/USD from moving higher.

There is little doubt that the eccentric Republican could spring a surprise. Just recall his recent statement that China might be purchasing oil from Iran — which runs counter to Washington's doctrine of cutting Tehran's revenues through sanctions. Still, investors are no strangers to presidential unpredictability. The U.S. president's maneuvers can come at any time. And it seems that markets are overly confident about continuing a universal 10% tariff only.

Dynamics of U.S. Tariff Revenues

This image is no longer relevant

So far, import tariffs have not significantly impacted the U.S. economy. Inflation remains subdued, and employment growth is slowing but still far from alarming levels. Even the contraction of U.S. GDP in the first quarter didn't worry anyone—it was attributed to front-loaded imports and a decline in net exports.

According to Danske Bank, the resilience of the U.S. economy to the shocks of White House protectionism is one of the reasons behind the difficult path of EUR/USD moving north. The bank projects that in the long term, over 12 months, the pair will rise to 1.22. However, in the short term, bulls face serious roadblocks. Alongside strong macro data, these include excessively bearish positioning on the U.S. dollar and ongoing geopolitical conflicts. These factors continue to support the greenback as a safe-haven asset.

U.S. Inflation Trends

This image is no longer relevant

I believe the market's overconfidence in Washington's ability to maintain only a universal tariff could negatively affect stock indices and the U.S. dollar. According to White House Chief Economist Stephen Miran, the U.S. could collect $3–5 trillion from import tariffs over the next 10 years. Alongside economic acceleration resulting from Trump's "big, beautiful bill" tax cut project, this could reduce the budget deficit by $8.5–11 trillion.

This image is no longer relevant

These figures are highly optimistic, but they indicate that the U.S. president has no intention of abandoning tariffs. On the contrary, he is very likely to raise them in early July. This would be a shock to financial markets and could spark a wave of selling across U.S. assets, including the dollar.

From a technical standpoint, EUR/USD is fighting for control over the pivot level at 1.1625 on the daily chart. If the bears win, forming a double-top pattern could be a basis for short-term selling. Conversely, a bullish breakout would allow longs to be extended toward a target of 1.20.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/CHF. Analysis and Forecast

Today, the USD/CHF pair retraced part of its decline from a new weekly low recorded during the Asian session and has temporarily paused its downward movement, stopping short

Irina Yanina 12:26 2025-07-10 UTC+2

Market dupes sellers

The split within the Federal Reserve, NVIDIA's successes, and a successful auction of 10-year US Treasury bonds allowed the S&P 500 to ignore the tariff chaos. Donald Trump announced tariffs

Marek Petkovich 12:02 2025-07-10 UTC+2

What to Watch on July 10th: Fundamental Event Overview for Beginners

Macroeconomic Report Analysis: There are very few macroeconomic publications scheduled for Thursday, and none of them are expected to be significant. So what could traders focus on today? The second

Paolo Greco 09:07 2025-07-10 UTC+2

GBP/USD Overview on July 10, 2025

On Wednesday, the GBP/USD currency pair maintained its downward movement, which is corrective in nature and could end at any moment. The price remained below the moving average line

Paolo Greco 07:26 2025-07-10 UTC+2

EUR/USD Overview on July 10, 2025

The EUR/USD currency pair continued to trade very calmly on Wednesday. The pair maintained a slight downward bias, as we've noted in all of our recent articles. However, the current

Paolo Greco 07:16 2025-07-10 UTC+2

USD/CAD. Analysis and Forecast

Today, the USD/CAD pair is showing signs of recovery, rising toward the 1.3700 level and approaching the weekly high reached earlier. Fundamental factors point to bullish dominance and the potential

Irina Yanina 12:46 2025-07-09 UTC+2

Markets unfazed by Trump's new tariff threats

Donald Trump's bark is louder than his bite. Markets have grown so accustomed to his rhetoric that the S&P 500 barely flinched at the White House's latest threat to slap

Marek Petkovich 11:53 2025-07-09 UTC+2

AUD/USD. Analysis and Forecast

The AUD/USD pair is holding steady at current levels with a bullish bias but limited movement following the release of inflation data from China—Australia's key trading partner. In June

Irina Yanina 11:35 2025-07-09 UTC+2

USD/JPY. Analysis and Forecast

On Wednesday, the Japanese yen extended its decline for the third consecutive day, pushing the USD/JPY pair to a new two-week high above the key 147.00 level during the Asian

Irina Yanina 11:23 2025-07-09 UTC+2

Consumer lending in the US is slowing down

According to data, consumer lending in the U.S. grew at its slowest pace in three months in May amid a decline in outstanding balances on credit cards and other revolving

Jakub Novak 10:43 2025-07-09 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.