Dollar Firms Despite Court Tariff Ruling. Trump Fires Back

EUR/USD slips below 1.1800 as bearish momentum builds

The dollar lost ground against most of its major counterparts on Friday but finished the week higher against the euro after the Supreme Court ruled against Trump’s tariffs. According to the Court’s decision, the tariffs were imposed under a law that is meant for national emergencies, and the President’s use of this law went beyond his authority.

With the tariffs gone, there’s still the messy issue of refunding the money already paid. The process will not be automatic and will most likely require legal action, which could drag out for years. Also, President Trump was quick to mention there are other ways to impose tariffs and announced a 10% global tariff under Section 122 of the 1974 Trade Act. Soon after, he announced on TruthSocial that he would raise the number “to the fully allowed, and legally tested, 15% level”.

The Core PCE Price Index showed that inflation accelerated by 0.4%, higher than the previous 0.2%, while the Advance GDP showed a drastic discrepancy from the forecast: the economic growth was 1.4%, while the anticipated figure was 2.8%.

Economic Calendar Highlights

We have a pretty quiet week ahead, with only a few notable events. The first one will be the release of a U.S. Consumer Sentiment survey, scheduled for Tuesday at 3:00 pm GMT; this survey has a medium-to-low impact on the market.

President Trump will deliver the State of the Union address at the Capitol Building in Washington on Wednesday at 2:00 am GMT. This could have a major market impact, depending on the issues he touches upon and his tone. It’s clear that he is not very happy with the current situation, so we can expect some fireworks.

The German Consumer Price Index (CPI) will come out on Friday at 12:00 pm GMT, followed at 1:30 pm GMT by the U.S. Producer Price Index (PPI). The higher the difference between actual and forecast, the higher the market impact will be.

Technical Outlook – EUR/USD

The pair descended below the support at 1.1800 and finished last week at 1.1777 on the back of renewed dollar strength. Depending on how the market digests the new tariff situation, the pair may become volatile, but strictly from a technical point of view, EUR/USD is headed towards the bullish trend line and the support at 1.1600.

The RSI is bearish after clearing the overbought condition (1.2080 top), and the uptrend is wavering. However, if the price goes past 1.1900, we might see a fresh batch of buyers entering the market. For this to happen, the tariff situation will probably have to come into play.