EUR/USD Near 1.16 as Yields and Tariffs Offset

That combination is exactly what investors worry about in a stagflation-style setup: growth soft enough to cap risk appetite, but not weak enough to force a decisive policy pivot. CPI is forecast at 335.512 for July, up 0.89% from the prior month, reinforcing the view that price pressures are still present even as the economy loses momentum.

For currency traders, that means the usual macro playbook offers less help than usual. EUR/USD is trading around 1.16, with the pair close to its 50-day moving average at 1.15 and its 200-day average at 1.16, while the RSI reading of 67.9 suggests the euro has regained some near-term momentum without leaving a clear trend in place.

The dollar’s recent firmness is also being tested by a separate policy shock. A Supreme Court ruling that found many Trump-era tariffs exceeded presidential authority has forced the U.S. government to refund about $100 billion to importers, a move that lowers trade friction for some companies but raises questions about the durability of tariff-driven policy tools.

That matters for investors because tariff refunds can trim one source of imported inflation and support euro-area exporters, but they also inject fresh uncertainty into U.S. fiscal and trade policy. The dollar index ETF UUP has recently pulled back to 28.07 from a July peak near 28.50, while the euro has been bid enough to push Adalytica’s euro trade signals to “Extreme Greed,” a sign that positioning may be crowded even if the macro case is still unresolved.

The bigger market message is that both sides of the pair are being pulled by opposing forces: the U.S. has firmer yields and still-elevated inflation, while the euro benefits from a weaker greenback and less immediate policy pressure. Until one side gets a decisive growth or rate advantage, EUR/USD is likely to stay range-bound and reward tactical trading over big directional bets.