EUR/USD Slides 1.2% as US Tariff Reversal Sparks Dollar Rally & Risk Appetite Surge

European session saw EUR/USD fall to $1.1295 after bouncing from $1.1227. This was a result of the US Dollar rally sparked by the US Court.

Written by: Arslan Butt • Friday, May 30, 2025 • 1 min read

Quick overview

EUR/USD fell to $1.1295 after a rally in the US Dollar due to a court ruling against Trump's tariffs.
The US Dollar Index rose above 100.00, leading to a broad relief rally in Asian and European markets.
Futures markets have reduced rate cut expectations for 2025 from 50 to 42 basis points amid shifting sentiment.
EUR/USD is coiling for a potential breakout, with key resistance at $1.1377 and support at $1.1227.

European session saw EUR/USD fall to $1.1295 after bouncing from $1.1227. This was a result of the US Dollar rally sparked by the US Court of International Trade decision to overturn former President Trump’s “Liberation Day” tariffs. The ruling, which highlighted Congress’s sole authority over trade regulation, changed market sentiment and sent the dollar soaring.

The US Dollar Index (DXY) broke above 100.00, up 1.8% from last week’s lows. This triggered a broad relief rally: Asian equities jumped, European and US stock futures pointed to a strong open and investors regained risk appetite. With stagflation fears easing, the Fed’s policy outlook looked more balanced.

Rate Cut Bets Ease Up

As sentiment shifted, futures markets trimmed rate cut expectations. Now around 42 basis points of easing for 2025, down from 50 earlier in the week. The US government has appealed the court decision but investors are focused on the 10-day compliance window.

Meanwhile, mixed US data on Thursday. Weekly jobless claims up to 240,000 from 226,000, labor conditions softening. Preliminary GDP slightly better than expected, -0.2%. Pending home sales -6.3%. Fed officials Barkin, Goolsbee, Kugler and Daly added to the narrative with comments on policy and risks.

Technical Analysis: EUR/USD Coiling for Breakout

EUR/USD is coiling in a tightening range, testing resistance at $1.1377 and support at $1.1227. The 50-EMA is around $1.1328, indecision. Recent candles have upper wicks at resistance, buyer exhaustion. MACD histogram is flattening, bullish crossover.

EUR/USD PriceChart - Source: Tradingview — EUR/USD PriceChart – Source: Tradingview

Break above $1.1377 could be $1.1425 or higher.
Below $1.1295 could be $1.1227.
Watch for decisive candle patterns like engulfing or spinning tops.

Stay nimble as the market prepares to breakout, technicals are setup for a big move.

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ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.