EURUSD breaks below the key support and comes back to retest it. Now what?

The USD got a boost across the board tonight after a US Federal Court ruled against Trump’s reciprocal tariffs from going into effect. The first reaction was of course expecting even better growth ahead with the tax cuts, deregulation and so on, but this is not a permanent thing.

The Trump administration has already appealed the ruling and the President has other ways to impose tariffs as Goldman Sachs mentioned here. So, overall, I would say it doesn’t change much and it just adds to more volatility ahead.

For further gains, the US
Dollar will need either strong economic data to make the market to price out the
rest of the rate cuts expected by year-end or weak data from its peers to make
the divergence with the Fed stronger.

Starting from next week, we have lots of key events for the USD
including the release of the ISM PMIs, the NFP and the CPI, which will
culminate into the FOMC decision on June 18th.

On the 1 hour chart, we can see that the price broke below the key support zone around the 1.1260 level where we had also an upward trendline for confluence. The price then recovered the losses and is now back retesting the support that now might turn into resistance. The sellers will likely step in around these levels with a defined risk above the downward trendline to target new lows. The buyers, on the other hand, will look for a break above the downward trendline to increase the bullish bets into new highs.

This article was written by Giuseppe Dellamotta at www.forexlive.com.