• EUR/USD forecast remains positive for now despite dollar recovery ahead of tariff expiry
• Risk sentiment holds firm across global markets
• Trump threatens BRICS-aligned countries with additional tariffs

Markets appear to be in a holding pattern ahead of Wednesday’s key tariff deadline. While risk appetite remains firm, investors should be alert to headline risk over the next 48 hours. The scope for last-minute deals is high, but so too is the possibility of renewed trade tensions, with the midweek expiry of the 90-day tariff pause — the so-called ‘Liberation Day tariffs’ — threatening to disrupt the current calm. Ahead of that deadline, the US dollar has kicked off the week on a firmer note, particularly against the Aussie and Kiwi — two currencies most sensitive to global growth sentiment. But the broader backdrop remains far from defensive. European equity markets were trading higher, and US futures were clawing back lost ground after Friday’s holiday-induced lull. Risk appetite, for now, is holding up. If Wednesday passes without escalation, expect risk assets to breathe a sigh of relief. But if talks stall — particularly with large blocs like the EU or BRICS-aligned economies — volatility could reawaken. But the EU Commission has said that it’s nearing a framework agreement with the US to avoid the introduction of aggressive tariffs by the July 9 deadline. If so, this should keep the bullish EUR/USD forecast intact.

What to expect from the dollar this week?

Expect the dollar to remain headline-driven this week given that the macro calendar is quite light – certainly as far as US data is concerned.

The US dollar has begun the week on stronger footing, particularly against the antipodean currencies, as investors brace for a potentially disruptive week on the trade front. The AUD and NZD have been the weakest, though this appears more about positioning than panic, with both the RBNZ and RBA meetings to come this week.

For now, global risk appetite remains resilient — European equity markets are comfortably in the green, and US futures are recovering ground lost on Friday during the 4 July holiday closure. Volatility remains muted, but the calm may prove temporary.

Tariff deadline looms, putting EUR/USD forecast in focus

Markets are now pivoting to what could be a volatile week for risk assets. The 9 July deadline looms large: this is when the 90-day suspension on the so-called Liberation Day tariffs expires. If no formal trade agreements are reached by 12:01 AM EST Wednesday, a wide swath of punitive tariffs — some ranging from 20% to 70% — will automatically snap back into place.

Key developments:

• The US is sending formal tariff letters today to 12–15 countries – deadlines of which should become available later on
• Treasury Secretary Scott Bessent hinted that a few nations may be given extra time to conclude deals, but the broader message is clear, that this is the final call
• Separately, Donald Trump has warned that any country aligning with BRICS — Brazil, Russia, India, China, and South Africa — will face an automatic 10% tariff hike

Where we stand on trade

The White House has taken a more pragmatic tone in recent months, favouring deal-making over outright escalation. Here’s the current state of play:

• UK & Vietnam – Trade deals signed
• Canada – Extension granted to 21 July following retreat on digital services tax
• China – Framework agreement in place (rare earths & countermeasures), but no signed deal
• EU & Asia – No deal yet; under pressure as most trade imbalances stem from these blocs

Whether we see a wave of last-minute diplomacy, or a sharp escalation remains uncertain. All outcomes — deals, extensions, or full-scale tariff reintroduction — remain firmly on the table.

So far, the market is walking a tightrope between constructive risk sentiment and growing geopolitical tension. For investors, the key lies in headline timing: how quickly deals get done (or don’t), and whether Trump’s BRICS warning turns into enforceable policy.

Technical EUR/USD forecast: Key levels to watch

The EUR/USD chart has been technically overbought on the daily and weekly time frames, judging by the RSI indicator, in the last couple of weeks. So, the small dip we are seeing is hardly surprising, but it doesn’t mean that the EUR/USD forecast has turned bearish from a technical point of view. The higher highs are still in place, which means the path of least resistance is still to the upside until the charts tell us otherwise.

Among the key support levels to watch, 1.1700 is a sort-term level that needs to be watched closely today. Below this we have 1.1630ish, followed by the now-broken April’s high of 1.1573. Other important support levels include the psychologically important 1.15 level, where a bullish trend line comes into play.

Some resistance is expected around the next round handles of 1.18 and 1.19, should we get to those levels.

In summary, the US dollar is firmer for now. The greenback has found support after the stronger-than-expected non-farm jobs report last week and a modest rise in front-end US yields. But the broader trend remains mixed at best for the greenback. The next 48 hours will be pivotal, which could well impact the EUR/USD forecast.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R