At the time of writing, the EUR/USD pair is trading with slight losses around 1.1285, bouncing back from its earlier low of 1.1213. A recent ruling by a US court against trade tariffs created market turmoil during the Asian session, driving the USD to its highest point in the past ten days.
The ruling, made by three judges from the US Court of International Trade, unanimously rejected President Donald Trump’s extensive trade tariffs by asserting Congress’s exclusive authority to regulate commerce. This news boosted investor confidence, resulting in significant gains for the US Dollar and causing stock markets in Asia and Europe to rise. Futures for Wall Street are also predicting a strong opening.
Investors have responded positively to the court’s decision, which had raised concerns that the tariffs could lead to higher inflation and weaken the economy, as noted in the last Federal Reserve (Fed) meeting minutes.
However, the US government has quickly appealed the ruling, indicating a lengthy legal process to follow. This could potentially disrupt the current relief rally, but for now, the positive market sentiment has eased the “Sell America” trade.
After a strong rally last week, EUR/USD is currently experiencing a downward correction. The pair has broken and confirmed below the bottom of an ascending channel, finding support at 1.1215 (May 20 low). Price action is showing a slight recovery, although technical indicators on the 4-hour chart remain bearish. Any attempts at an upside move may face resistance at the previous intraday support at 1.1285 and the reverse trendline, currently at 1.1315.
If the support at 1.1215 is breached, the next support levels to watch out for are 1.1130 (May 16 low) and 1.1065 (May 12 low).