EURUSD Has Tariff Deadline Ahead

The EURUSD exchange rate will look to data on Monday to test the continued uptrend, while the tariff deadline looms.

The EURUSD has a risk of correction with data after the stretch above the recent resistance. A test of 1.5171 could still find buyers to keep the uptrend in play if data supports.

German industrial production data will be the first release at 2pm HKT, with markets expecting an improved reading of -0.5% over last month’s -1.4%.

European Central Bank (ECB) Governing Council member Joachim Nagel will have a speech at 4pm HKT, but that may not stray too far from comments last week. Nagel said that the monetary policy is now in a neutral zone, while inflation is in “calm waters”.

The policymaker said he hopes that ongoing tariff discussions with the United States will come to a positive conclusion. Despite the recent rally in the euro, he added that the euro is “not exceptionally high” against the dollar.

However, any doubt over tariffs could see a correction in the single currency. Donald Trump has hinted at another transatlantic trade war, with a 17% tariff on Europe’s cherished food and farm exports. Sources said that Trump intends to send formal letters to a dozen countries to warn of permanent tariffs of up to 70% unless they reach a deal by the 9 deadline.

“They’ll range in value from maybe 60, or 70 per cent to 10 and 20 per cent, but they are going to be starting to go out sometime tomorrow,” he told reporters.

For the EU, that could see products such as Belgian chocolate, French cheeses, Spanish and Italian olive oil, and meats facing a tariff wall at US borders, and potentially removing billions from the agricultural sector.

The EU could respond with tariffs on products such as Boeing aircraft and alcohol exports. A failure to reach a deal could see the euro lose value against the US dollar.

Monday will bring European retail sales at 5pm HKT and will follow last month’s 2.3% growth. Traders should be aware of the larger events at play after weakness in the dollar continues.