falls with trade talks in focus and following weak retail sales. Oil slips after OPEC+ increases output by more than expected.
EUR/USD Falls With Trade Talks in Focus and After Weak Retail Sales
- The EU and the US are nearing a framework agreement
- Eurozone retail sales fell -0.7% MoM
- EUR/USD remains in an uptrend but eases from a recent high
EUR/USD is cooling on Monday, with a resurgence in the driven by renewed trade concerns and a slump in Eurozone retail sales, the largest since August 2023.
While the USD is rising today, it remains close to its 3.5-year low as investors brace for the impact of Trump’s tariffs. Over the weekend, US Treasury Secretary Scott Bessent stated that U.S. President Trump would send letters to some trading partners, warning them that tariffs would revert to the April 2 levels as of August 1 if no progress is made on a trade deal.
While she said that this wasn’t another new tariff deadline, it does give trading partners more time to renegotiate tariff rates. Trump is currently finalising specific rates and agreements, and could send out letters on tariffs today. he also indicated that trade deals or letters with most nations would be done by July 9th
The EU Commission said it’s nearing a framework agreement with the US to avoid the introduction of aggressive tariffs by the July 9 deadline.
Separately, eurozone fell sharply in May, dropping 0.7% month-on-month, in line with expectations and down from 0.3% in April. This marked the sharpest drop since August 2023, as uncertainty over U.S. trade tariffs weighed on consumer sentiment and curbed spending.
Delving deeper into the figures, all sectors experienced a contraction, with sales of food, drink, and tobacco falling 0.7%.
EUR/USD Forecast – Technical Analysis
The EUR/USD trades within a rising channel that dates back to mid-May. The price encountered resistance at 1.1830, a 4-year high, and has since eased back below 1.1730, the midpoint of the rising trendline. The RSI has moved out of overbought territory.
Despite the correction, the uptrend remains intact. Buyers will look to rise above 1.18 and 1.1830 to create a higher high and head towards 1.19.
It would take a move below the 1.1580/1.16 zone for sellers to negate the near-term uptrend. A break below 1.1450 would create a lower low and potentially fuel a deeper decline.
Oil Slips After OPEC+ Increases Output by More Than Expected
- OPEC+ raises output by 548k in August
- Trump’s trade tariff news is being watched for oil demand implications
- Oil trades above the near-term rising trendline
fell on Monday, as tight physical markets offset a higher-than-expected OPEC+ output increase for August. Investors are also weighing up the potential impact of US tariffs on economic growth and future oil demand.
OPEC+ agreed this weekend to raise production by 548,000 barrels per day in August, which was more than the 411,000 barrel per day hike that they had agreed over the previous three months.
The OPEC decision is reinstating 80% of the 2.2 million barrels per day of voluntary cuts from OPEC producers. Goldman Sachs expects an announcement of a 550,000 barrel-per-day increase for September at the upcoming OPEC+ meeting on August 3.
U.S. officials have flagged the delay as to when tariffs would begin; however, they haven’t provided any precise details on what changes to rates would be imposed when. This uncertainty would limit any upside in oil prices as investors may remain concerned over the impact of slow economic activity on the oil demand outlook.
Oil Forecast – Technical Analysis
Following the recent volatility, which saw the oil price rally from a low of 57.00 to a high of 78 before falling to 64.00, the price is now trading more calmly. The price is trading in the long-term down channel. However, the price remains above the near-term rising trendline, dating back to early May, with gains capped by the 20 SMA.
Sellers are testing the rising trendline support at 65.00. A break below this level exposes the 50-day SMA at 63.50. Below, 60.00 comes into focus.
Should the rising trendline hold, buyers will look to rise above 67.80, the 20 SMA, to expose the 100 SMA at 68.70. A rise above here and the 70.00 round number brings the April high, 72, into focus.
