Key events today:

21.07 14:00 UTC: USD – Leading Indicators Index.

The euro remains under pressure at the start of European trading, hovering around 1.1620–1.1630. A key reason for its weakness is the escalation of the trade conflict: the U.S. administration confirmed its readiness to impose 30% tariffs on most European goods starting August 1 if negotiations do not result in “full and unconditional market openness.” The European Commission has already prepared countermeasures, but the mere threat is boosting safe-haven flows into the dollar and increasing its appeal.

Additional pressure on the euro comes from the ECB’s recent decision to cut the key interest rate and revise its inflation forecast downward for 2025–2026. The regulator signaled a continuation of a dovish stance if price slowdown persists, while the Fed is only discussing the possibility of the first rate cut in the fall. The divergence in monetary policy paths favors the dollar, especially amid rising U.S. Treasury yields.

Finally, markets are closely watching U.S. CPI data for June: the consensus points to an acceleration of the index to 2.7% y/y, which would reinforce expectations that the Fed will hold off on easing. Thus, the fundamental balance remains in the dollar’s favor, and any rise in the EUR/USD pair above 1.1650 may present a selling opportunity.

Recommendation: SELL 1.1625, SL 1.1660, TP 1.1575.