At the time of writing, the EUR/USD pair is experiencing moderate losses, hovering around 1.1285, after bouncing back from its lows of 1.1213. Market sentiment was shaken during the Asian session due to a US court ruling against trade tariffs, causing the US Dollar (USD) to reach its highest level in the past 10 days. The decision was a unanimous vote by three judges from the US Court of International Trade, who believe that the power to regulate trade lies with Congress, not the President.
The news sparked a risk-on sentiment, resulting in a significant rally for the US Dollar and leading to higher stock market performance in both Asia and Europe. Futures for Wall Street also indicate a strong opening. Investors have welcomed the ruling, as Trump’s tariffs raised concerns about higher inflation and an economic slowdown, as revealed in the minutes of the last Federal Reserve (Fed) meeting.
However, the US Government has appealed the ruling, hinting at a lengthy and ongoing legal process. This could potentially put a halt to the current relief rally, but for now, the positive market sentiment has subdued the “Sell America” trade.
The EUR/USD pair is currently experiencing a bearish correction after last week’s strong rally. It has broken and verified below the bottom of its ascending channel before finding some support at the May 20 low of 1.1215. Although there is a minor recovery in price, technical indicators on the 4-hour chart are still showing bearish signals. Any attempts at upside movement will likely face resistance at the previous intraday support level of 1.1285 and the reverse trendline at 1.1315.
If the pair breaks below the mentioned support at 1.1215, the next targets will be at 1.1130 (May 16 low) and 1.1065 (May 12 low).