Key Events

• Tariffs are expected to intensify, targeting entities that impose fines on U.S. tech firms, BRICS-aligned countries, the pharmaceutical sector, and copper trade.
• The U.S. Dollar is rebounding from a critical 17-year trendline, pressuring EURUSD near 1.17 and USDCAD above 1.36.

With the latest statements from Trump reaffirming his intent to escalate tariff measures in defense of the U.S. economy, taxes on pharmaceuticals, copper, countries imposing fines on U.S. tech, and BRICS-affiliated nations are set to continue — and likely intensify.

The current state of the U.S. Dollar may be aiding domestic production and exports, aligning with Trump’s objectives. At the same time, the DXY is testing a critical support trendline that has held for 17 years, potentially defining the next long-term direction for the greenback. While dollar uncertainty lingers and momentum signals appear exhausted, the currency market may be poised for a broader correction this summer. This comes as global equity indices hold near record highs, but face renewed pressure with the earnings season resuming in mid-July.

Technical Analysis: DXY, EURUSD, and USDCAD

DXY Outlook: Monthly Time Frame – Log Scale
​​Source: Tradingview

The DXY is currently testing the lower boundary of a primary uptrend extending from the 2008 lows. This level has become a focal point for potential reversal across major pairs — EURUSD is stalling below 1.18, and USDCAD is holding above 1.35. Should the DXY break below this long-term support zone (between 96 and 94), it could trigger a steeper phase of dollar weakness for the remainder of 2025.

EURUSD Outlook: Daily Time Frame – Log Scale
​​Source: Tradingview

Unlike the DXY, EURUSD has broken above the upper boundary of its 17-year descending channel. However, further upside may be capped as the DXY retests its 17-year support. A clean break and hold above 1.1830 could open the path toward 1.20 and 1.24. On the downside, if the pair pulls back below 1.17, support levels at 1.14, 1.12, and 1.10 may come into play — aligning with the former channel resistance, now acting as support.

USDCAD Outlook: 3-Day Time Frame – Log Scale

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Source: Tradingview

In parallel with the DXY’s rebound from the 96-level, USDCAD has bounced from its 1.35 support zone, coming off oversold conditions last seen in 2021. The pair is also respecting a breakout from the 2025 contracting downtrend pattern. Key upside targets for the ongoing correction are 1.3830, 1.3860, and 1.40 — aligning with a significant support/resistance zone established in October 2022. However, if 1.36 and 1.3520 are breached to the downside, the bearish trend could resume, with downside levels at 1.34 and 1.32 in focus.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves