EUR/USD climbs past 1.1400 as tariff tensions and US debt concerns weigh on the dollar

EUR/USD is trading firmly higher on Monday, holding comfortably above the 1.1400 level as the US Dollar comes under pressure from renewed tariff threats and mounting debt concerns.

Market sentiment took a hit late Friday after President Donald Trump announced a doubling of tariffs on steel and aluminum imports—from 25% to 50%. Investors fear these measures could dampen economic growth and further stoke inflation in the US.

Adding to the pressure, Trump reignited trade tensions with China, accusing Beijing of breaching a minerals agreement. In response, Chinese officials dismissed the claims as “groundless” and warned of strong retaliatory actions.

These developments mark another chapter in the US’s unpredictable trade policy, intensifying worries about fiscal stability. A massive tax reform projected to add trillions to the national debt recently led Moody’s to downgrade the US credit outlook, fueling broader investor moves away from US assets in what’s being dubbed the “Sell America” trade.

Daily Market Movers Digest: US Dollar Slips as the Week Kicks Off

• The US Dollar started the week under pressure, giving the Euro room to advance amid weakening market sentiment and a packed economic calendar ahead. Asian markets closed in the red, while European and US stock futures suggest a negative open. The US Dollar Index is down 0.3%, paring back gains from Friday.
• The Euro is drawing strength from dollar weakness and improved sentiment following Eurozone data. The bloc’s May Manufacturing PMI came in at 49.4 — its fifth consecutive monthly improvement and the strongest level in nearly three years. However, Germany’s Manufacturing PMI was revised lower to 48.3 from the initial 48.8, highlighting ongoing softness in the region’s largest economy.
• Earlier on Monday, Federal Reserve Governor Christopher Waller struck a dovish tone, suggesting rate cuts could still be on the table despite inflationary pressures related to tariffs. His comments weighed further on the greenback.
• Supporting Waller’s view, Friday’s US Personal Consumption Expenditures (PCE) Price Index showed continued moderation. The headline YoY reading fell to 2.1% in April from 2.3%, beating expectations of 2.2%, while the core PCE eased to 2.5% from 2.7% in March — both readings reinforcing the case for Fed easing.
• US-China trade tensions remain a headwind. Treasury Secretary Scott Bessent expressed confidence that the latest dispute will be resolved during future talks between President Trump and President Xi Jinping. However, Beijing’s firm response to recent US accusations signals little willingness to make the first move.
• Looking ahead, Euro bulls face a critical week. Tuesday’s Eurozone CPI data is expected to show further easing in inflation, strengthening the European Central Bank’s case for monetary support. On Thursday, the ECB is widely anticipated to cut interest rates for an eighth consecutive time. President Christine Lagarde is expected to deliver a cautious message, but weak growth and soft inflation may force more dovish action, potentially weighing on the Euro.
• In the US, focus turns to May’s ISM Manufacturing PMI due later today. A better-than-expected reading may offer temporary relief to the Dollar, though the sector is still expected to remain in contraction.

Technical Analysis: EUR/USD Tests Key Resistance Zone

EUR/USD is on the rise to start the week, with technical momentum supporting further gains. The pair is hovering just below the 1.1400 mark and appears poised to challenge a key resistance area between 1.1415 and 1.1435.

A confirmed breakout above this zone would hand control back to the bulls, potentially targeting the next upside level at 1.1545.

On the downside, failure to clear resistance could shift momentum back to the bears, putting the May 30 low at 1.1315 in focus, followed by stronger support near 1.1220.

4-Hour Chart Summary