Euro under pressure: trade blackmail as a new risk

EUR/USD

Key zone: 1.1680 - 1.1750

Buy: 1.1800 (on a decisive break of the 1.1750 level) ; target 1.2000-1.2150; StopLoss 1.1740

Sell: 1.1650 (on strong negative fundamentals) ; target 1.1500; StopLoss 1.1720

Trump intends to tighten tariff policy toward the European Union: duties on cars and trucks could be raised to 25% from the previously agreed 15%. The formal justification is the EU’s failure to comply with the terms of the trade agreement.

Initially, the deal implied that the EU would accept a near-universal 15% U.S. tariff rate and eliminate most duties on American goods. Despite its political unpopularity in Europe, it was seen as a way to avoid further escalation. That balance is now in question.

According to Trump, stricter tariffs are meant to accelerate the relocation of European automakers’ production capacity to the United States.

Additional pressure on the euro comes from worsening global risk sentiment: the diplomatic deadlock between the U.S. and Iran coincides with a new round of trade tensions between Washington and Brussels. If harsh rhetoric persists, a full escalation scenario becomes increasingly likely—although another policy reversal in classic “TACO” style cannot be ruled out.

Reminder: the EU had already prepared a $95 billion list for retaliatory tariffs in case the U.S. follows through on threats against the European auto sector.

• Trump accuses the EU of delaying ratification of the agreement (“Turnberry deal”), which, in his view, undermines its effectiveness.
• Tariff hikes are seen as a pressure tool aimed at localizing production in the U.S.
• The U.S. domestic market will also bear costs: additional tariffs could cost consumers around $15 billion annually through higher prices for cars and components. Following Trump’s statements, automaker stocks declined: Ford and General Motors by 2.4%, Stellantis by 3.3%.
• The greatest risks fall on export-oriented European economies with integrated supply chains—primarily Germany, as well as Slovakia, Italy, and Sweden. According to the Kiel Institute for the World Economy, Germany’s short-term losses could reach €15 billion, with long-term losses up to €30 billion.
• German car exports to the U.S. have already fallen by nearly 10% after earlier tariff measures, making new restrictions particularly painful for the sector.

The decree to raise tariffs has not yet been signed, but the political signal is clear: the decision will be implemented if the EU fails to engage in active dialogue.

Despite rising risks, buyers continue to support EUR/USD in an upward trend, largely due to overall dollar weakness. Over the past four weeks, the pair has remained within a wide range but consistently closed around the 1.17 level.

The euro remains resilient due to external factors, but the fundamental backdrop is deteriorating. Trade escalation with the U.S., geopolitical uncertainty, and pressure on Europe’s export sector are creating reversal risks. By the end of this week, the balance could shift in favor of sellers.

So we act wisely and avoid unnecessary risks.

Profits to y’all!