Tariff discussions are pending an official announcement set for 16:00 ET/20:00 GMT. The French Government Spokeswoman Primas stated that France anticipates tariffs between 20-25%.
The USD has gained traction as risk assets declined. Recent EURUSD movements have provided opportunities for technical traders, following established trendlines closely.
Market Sentiment Shifts
Sellers are expected to maintain pressure along the downward trendline, seeking new lows. Conversely, buyers aim for a breakout to pursue higher targets.
With tariff clarity expected within hours, earlier remarks from Primas have already started tilting sentiment. Market participants appear to be preparing for potentially wider trade disparities, which could influence asset repricing in multiple sectors, particularly in currencies tied to export strength. Given the projected French expectations of a 20–25% rate, positioning ahead of the release has grown more deliberate, with fewer signs of speculation and more focus on layered entries.
We’ve seen the dollar extend its gains steadily as traders rotate out of riskier holdings. Lower-beta assets have been preferred, which tends to follow during uncertain policy intervals. The euro, in particular, has softened—largely in line with waning confidence in export-friendly policy continuity.
Technical Patterns Strengthen
Trendlines on the EURUSD pair remain firmly respected. Sellers have leaned into the downward channel and found fuel from macro developments, not just technical alignment. The recent rejection at the 50-day average has emboldened those expecting another probe lower. It’s been a classic descending structure: lower highs confirming a bias, volume thinning with every attempt upwards.
Bullish participants are still watching for a break above recent congestion zones. They’ll need data or news supportive enough to spark fresh demand for the single currency. Until then, upward ambition faces constraint, both technically and fundamentally. Many seem to be layering call spreads cautiously, not yet abandoning the trend, but prepared to react in session.
In the short term, directional exposure around the event should be tempered. The forward-looking volatility pricing suggests markets are bracing for only a moderate move, but recent undershoot in realised volatility warns against complacency.
For those of us watching derivatives markets, the premium structure in short-dated options has begun to reflect binary expectations. The shift in skew implies traders are assigning more weight to a negative outcome, reinforcing downstream bias in spot and forward trading.
Expect follow-through action to hinge on the tone and scale of the announcement this evening. If it aligns with current assumptions, the majority of the move may be brief and sharp — perhaps complete within the first hour. But an unexpected figure, either lower or higher than voiced levels, could prompt unwinding or gap extension depending on how aggressively traders have positioned.
Caution would demand waiting for confirmation outside current ranges before committing too heavily. Early reactions, especially in futures, may whipsaw. We anticipate volume clustering around the European close and again into the Asia handover. That rhythm will likely define initial positioning into the weekend.
