EUR/USD: Double-top bearish reversal is at play - OCBC

Euro (EUR) began the week near its recent highs but then eased slightly lower. The recently announced trade deal with the US was generally welcomed; however, some officials from France, German expressed concerns that the agreement appears unbalanced, and several details remain unclear at this stage. EUR fell; last at 1.1564 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Price pattern shows a double-top bearish reversal

"The headline terms indicate a 15% tariff on most EU imports to the US, which is an improvement compared to the previously threatened 30% rate. Additionally, the EU plans to invest $600 billion in the US and increase its purchases of American energy and military equipment. Despite this, statements from EU and US officials have been somewhat contradictory. According to the EU, the 15% tariff would be comprehensive, not additive to existing industry-specific tariffs, and would cover sectors such as pharmaceuticals, semiconductors, and automobiles."

"The EU also mentioned that duties on metals would be reduced and replaced by a quota system; currently, steel and aluminium face a 50% tariff. However, President Trump later stated that the 50% tariffs on steel and aluminium would remain unchanged and that the 15% tariff would exclude pharmaceuticals. Contradicting this, senior US officials confirmed that both sides agreed on a 15% tariff rate for EU pharmaceutical exports. A separate Section 232 investigation on pharmaceuticals is expected within the next three weeks, but the EU's tariff level will stay at 15% in the meantime."

"This ongoing ambiguity over pharmaceutical tariffs raises broader questions about sector-specific tariffs, particularly in pharma and semiconductors--areas Trump previously highlighted but has yet to clarify in detail. Daily momentum turned bearish while RSI fell. Price pattern shows a double-top bearish reversal in play. Support at 1.1430 levels. Resistance at 1.1780, 1.1840 levels."