EUR/USD drifts lower with markets cautious as trade tensions increase
The EUR/USD pair is posting moderate losses on Wednesday, nearing the bottom of the weekly range, as investors remain wary of risk after US President Donald Trump announced new tariffs on copper and pointed to significant restrictions on pharmaceuticals.
The Euro (EUR) found support at the 1.1700 area on Wednesday's Asian session after rejection at 1.1770 on the previous day, but upside attempts remain capped below 1.1730 so far. The broader trend remains bearish, with the pair correcting after a more than 2% rally in late June.
Trump took his trade war to the next stage after announcing 50% tariffs on imports of copper products and threatening a 200% levy on drugs if pharmaceutical firms do not relocate their production to the US within the next 12 months.
These measures come less than 24 hours after the US imposed 25% tariffs on Japan and Korea, the country's second and third major Asian partners. The deadline for their application was delayed to August 1, and US Government officials left a door open to adjustments if trading partners send their proposals, which contributed to easing the risk-averse reaction to the new tariffs.
In a more domestic scope, the trade negotiations between the Eurozone and the US do not seem to be at their best moment. Eurozone sources continue to express hopes of reaching a deal that will spare them from the 10% baseline levy, but Trump affirmed that he will send a tariff letter to the European Union this week. Not the best news for the Euro.
Source: FXstreet
