Europe Has Lost the Tariff War

GBP/JPY

Key zone: 203.50 - 205.00

Buy: 204.50 (on a strong positive foundation); target 206.50; StopLoss 203.80

Sell: 202.00 (after a retest of 203.00) ; target 200.00-198.00; StopLoss 202.80

Even with trade agreements in place, Trump’s economic blackmail continues, creating new risks for Europe. In fact, the EU has lost the tariff confrontation with the U.S. after Ursula von der Leyen accepted extremely unfavorable trade terms. The situation with China isn’t any better — the weak yuan has made European goods less competitive.

ECB President Christine Lagarde has been openly voicing concern for months about the euro being overvalued. The ECB’s interest rate remains a favorite topic for market speculation. A strong euro hurts EU exports, yet a too-weak euro undermines investor and partner confidence.

The two largest engines of the European economy — Germany and France — can no longer compensate for the eurozone’s structural weaknesses.

Let’s not forget: Germany and France together account for half of the EU’s GDP. When these economies struggle, the entire bloc suffers.

U.S. tariffs have hit European exports hard — reduced shipments to America are especially painful for German and French manufacturers dependent on the world’s largest market. Weaker foreign demand leads to declining production, lower revenue and investment, and rising unemployment. The strengthening euro only makes matters worse by reducing competitiveness both abroad and within the EU itself.

Meanwhile, China is aggressively expanding exports to Europe, squeezing out local producers. Over the past three years, the euro has appreciated by 16% against the yuan, further increasing the appeal of Chinese goods.

According to available reports, the ECB has already begun taking measures to stabilize the exchange rate, though no official confirmation has been provided. Formally, currency targeting is prohibited in the eurozone, and Switzerland’s recent return to FX interventions — which triggered harsh criticism from Washington — illustrates the risks of such policies.

The standoff with the U.S. continues, but European resistance is steadily weakening.

And let’s be clear: the current growth of the euro and pound isn’t due to their strength — it’s because the dollar is weak. This trend is highly unstable.

From a speculative perspective, better opportunities lie in yen cross-pairs, where technical gaps and correction potential remain. However, opening new positions should only follow a fundamental analysis of USD/JPY and strict risk management.

So we act wisely and avoid unnecessary risks.

Profits to y’all!