US Dollar Under Pressure as Trump Tariff Risks Resurface : EUR/USD and USD/JPY Technical Outlook

The US dollar came under broad selling pressure after President Trump reignited trade-war risks by threatening tariffs on countries opposing his Greenland proposal. Markets appear to be treating the rhetoric as destabilising and inflationary rather than growth-positive, prompting renewed USD selling across major pairs. Despite the US public holiday muting volumes, price action and technical signals point to a meaningful shift in near-term dollar momentum.

Macro Backdrop

Trump’s tariff threat has revived familiar trade-war dynamics, particularly for Europe, even in the absence of immediate retaliation. The reaction suggests investors are reassessing US policy risk, with the dollar losing ground against most majors. Range expansion across FX markets was notable given the holiday conditions, reinforcing the view that positioning is beginning to adjust rather than simply reacting to thin liquidity.

Commodity-linked and high-beta currencies outperformed, led by the New Zealand dollar following stronger domestic data and growing confidence that the RBNZ has ended its easing cycle. The Swiss franc also strengthened sharply, while the yen underperformed, highlighting ongoing divergence in traditional safe-haven behaviour.

Technical Outlook: EUR/USD

EUR/USD found strong support at the 200-day moving average, printing a clear bullish engulfing candle and completing a three-bar morning star reversal. This move was reinforced by bullish divergence on daily momentum indicators and a false break below the December low on the 4-hour chart, strengthening the reversal case.

Near-term dips toward the 1.1620 area or the 1.16 handle may attract buyers if the broader dollar tone remains soft. On the topside, resistance is seen near 1.1680, followed by the 1.17 region and the monthly pivot around 1.1715. A sustained break above this zone would further validate a short-term trend shift in favour of the euro.

EUR/USD Daily Chart

Technical Outlook: USD/JPY

USD/JPY printed a modest bullish hammer on the daily chart, holding the 20-day EMA. While this opens the door to a short-term corrective bounce, momentum signals remain fragile. The daily RSI has yet to reach oversold levels, while broader momentum continues to trend lower.

On the 4-hour timeframe, the structure resembles a corrective three-wave decline rather than a continuation pattern. As a result, any near-term bounce is viewed as corrective, with downside levels around 157.00 and the 156.68 high-volume node remaining key areas of interest once the rebound fades.

USD/JPY Daily Chart

Bottom Line

Trump’s tariff rhetoric has reintroduced policy uncertainty into FX markets, triggering renewed US dollar weakness despite reduced liquidity. EUR/USD is showing early signs of a constructive reversal from major support, while USD/JPY remains vulnerable after corrective bounces. Until trade risks fade or dollar sentiment stabilises, near-term risks remain skewed against the USD across several major pairs.