EUR/USD: Calm resumes around $1.1360

The EUR/USD returned to a relatively flat trajectory in the short term, amid easing US sovereign bond yields, with the market regaining its composure after a turbulent weekend on the trade war front between Washington and Brussels.

As a reminder, Trump threatened the EU with tariffs of 50% on 1 June, compared to 10% today. The US president justified this announcement by citing the difficulty of trade negotiations with Europe.

"It is very difficult to deal with the EU, which was created in the first place to take advantage of the United States from a commercial perspective. (...) Our discussions are going nowhere. Under these conditions, I recommend imposing 50% tariffs on the EU, starting June 1st. There are no tariffs on products made in the United States," he wrote on his Truth Social platform.

Tariffs on European products currently average 12.5%, with 2.5% corresponding to the level before Donald Trump's return to the White House, to which 10% have been added since the beginning of April and the announcement of his so-called "reciprocal" tariffs. The White House had initially planned to impose 20% tariffs on European products, before immediately announcing a 90-day pause on tariffs above 10%, allowing time for negotiations to conclude.

Trump ultimately postponed his ultimatum, moving the trade talks deadline to 9 July. Von der Leyen called the White House tenant to request more time to reach a constructive agreement. "Europe is ready to move negotiations forward quickly and decisively. To reach a good agreement, we will need time until July 9," declared the highly unpopular president of the European Commission on X.

"This see-saw reaction highlights a growing sentiment in the markets: investors no longer view Trump's tariff threats as credible economic policy measures, but rather as negotiating tactics," explains Daniela Hathorn of Capital.com.

Forex traders will be monitoring a key indicator at 16:00 (EU time), the Conference Board of Consumer Confidence (CBC).

Right now, the EUR/USD is trading at $1.1365.

KEY CHART ELEMENTS
The EUR/USD is currently passing the highly important chart test of the 50-day moving average (in orange). A breather is needed before setting new highs. That is, the formation of several support points on this trendline.

MEDIUM-TERM FORECAST
In light of the key chart factors we have mentioned, our medium-term view on the EUR/USD exchange rate is neutral.

We will maintain this neutral view as long as the EUR/USD exchange rate is positioned between the support at $1.1202 and the resistance at $1.1460.