After a quiet start to May in the tariff war, President Donald Trump is making moves again. He plans to raise tariffs on imports from the European Union and wants to double the current tariffs on and . On top of that, China is accused of not following the Geneva agreement, which puts the future of those deals at risk.
Meanwhile, on Sunday, Ukraine’s Security Service launched large drone attacks on Russian strategic aviation as part of Operation Spiderweb. These events, especially the tariff actions, have weakened the U.S. dollar, which is reflected in Monday’s gains for the main currency pair, .
Will ECB Drop Rates Below 2%?
This week, the key macroeconomic event is the upcoming . Most market participants expect the ECB to cut rates by 25 basis points, lowering the benchmark to 2.15%.
This rate cut is already priced in, but the key question is whether the ECB will continue easing monetary policy. This morning’s showed that eurozone inflation slipped below the 2% target, adding pressure for further rate cuts.
If inflation stays below 2%, it could slow the euro’s recent gains against the . The next inflation data will be crucial, with a sustained move below 2% supporting this scenario.
US Labor Market Data Next
This week started with US industrial data, which came in weaker than market expectations for the .
These readings continue a negative trend that started in early February, pushing the ISM manufacturing index back below the 50-point mark. This ongoing decline is adding downward pressure on the US dollar in both the short and medium term.
As usual, the data will be released this Friday. Early forecasts suggest little change is expected, unless there are unexpected surprises.
EUR/USD Technical Analaysis
The recent surge in demand for the major currency pair pushed it to its highest level in over a month, with the possibility of further gains. However, after the latest data from the eurozone, the pair is now pulling back toward the support level around 1.1380.
If supply supports a further rebound, investors will likely watch the area where the upward trend line meets the 1.1320 level. The main target for buyers remains the recent high around 1.1580.
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