The euro/dollar pair has been climbing for two days, mirroring a general decline in the U.S. dollar. Having briefly regained strength, the greenback is now under pressure again: the U.S. Dollar Index is slipping toward the 100.00 handle, even though just two days ago it was approaching the 102.00 level. Meanwhile, ZEW indices have provided a modest boost to the euro and, accordingly, to EUR/USD buyers. As a result, the pair has returned to the 1.12 range and is now testing interim resistance at 1.1230, where the Tenkan-sen and Kijun-sen lines intersect.

Looking at the weekly EUR/USD chart: in early March, the price surged by more than 500 points in response to Donald Trump's announcement of industry-specific tariffs and additional levies on Chinese goods. Interestingly, prior to this spring, the market had not reacted negatively to Trump's hawkish trade rhetoric. In fact, his tariff threats tended to support the safe-haven dollar, which saw increased demand (in January, EUR/USD dropped as low as 1.0179).

But everything changed dramatically at the end of February when the Atlanta Fed's GDPNow forecast unexpectedly projected a slowdown in the U.S. economy for Q1. That was the first clear warning sign. Things worsened when Trump himself acknowledged the possibility of a U.S. recession this year. On top of that, key macroeconomic indicators began to disappoint: not only did February's Nonfarm Payrolls fall short, but other indicators like retail sales, consumer confidence, and the ISM manufacturing index also came in weak.

This bearish backdrop propelled EUR/USD from 1.0370 to the 1.0850–1.0890 range. The pair remained within this corridor for three weeks until Trump again stirred up volatility in early April by announcing a new tariff plan—the most aggressive scenario among those previously considered. This put the dollar back under pressure and propelled EUR/USD to a multi-year high at 1.1574.

After that came a period of "thaw," which we may now be seeing the final stage of. Initially, there were unconfirmed rumors that U.S. and Chinese officials were informally discussing possible trade negotiations. Later, Trump hinted at tariff reductions for China and denied rumors that he planned to fire Jerome Powell. Finally, over the past weekend, the Geneva meeting took place, where the U.S. and China agreed to mutually reduce (but not eliminate) tariffs and "agree to agree."

This thaw led to a general strengthening of the dollar: EUR/USD fell from 1.1574 to 1.1066.

However, as we can now see, sellers failed to hold the pair within the 1.10 range, and buyers are now attempting to anchor the pair above the 1.1200 target.

This, in my opinion, is a troubling signal for dollar bulls, as the "negotiation track" is the greenback's main ally right now. All other fundamental factors are secondary. Even a key report like the CPI, which showed slowing U.S. inflation (thus easing fears of stagflation), failed to impress dollar bulls. Meanwhile, the outcome of the Geneva meeting helped the dollar strengthen across the board. But Geneva was more of a climax—the conclusion of the preliminary phase of the negotiation process. Now comes the actual negotiation phase, which could last an unknown amount of time with an uncertain outcome. We've been here before: during the 2018–2020 trade saga, it took a year and a half to finalize the so-called Phase One trade deal, which was only signed in January 2020.

It's unclear how long the current talks will last, but expecting a quick resolution is unrealistic. Also, let's not forget: tariffs haven't been removed, only reduced, and the sector-specific tariffs introduced in March still apply—as do the tariffs imposed during Trump's first term.

All of this casts doubt on EUR/USD's southern prospects. The greenback needs a solid news catalyst to resume sustainable growth (the keyword here is sustainable). Such a catalyst could be detailed updates from the U.S.–China talks (with a clearly positive tone) and credible reports pointing toward a nearing resolution. Traders are also closely watching the stalled U.S.–EU negotiations, despite Trump's bravado.

But following the Geneva meeting, there's been radio silence—interpreted as a negative for the dollar. There's also been no news about progress in U.S.–EU trade talks—both sides are keeping quiet.

This is why EUR/USD buyers have taken the lead, capitalizing on broad dollar weakness. Still, a sustained bullish trend would also require a clear news trigger (e.g., rumors of negotiation failure, lack of progress, prolonged silence, or harsh official statements). The current information vacuum works against the dollar, but further upward momentum also requires strong justification. For now, the situation remains in limbo.

Given the current fundamental backdrop, it's likely that EUR/USD will stall within the 1.12 range, specifically between 1.1180 and 1.1300—bounded by the middle and upper Bollinger Bands on the 4-hour chart. These are the borders of the price channel, but in practice, the pair is likely to hover within the 1.12 range while awaiting further developments. A similar situation occurred at the end of April (back then the "home base" was the 1.13 range), when the pair traded between 1.1300 and 1.1400 in anticipation of preliminary U.S.–China negotiations.

The tricky part is that any official statements—unpredictable by nature—about progress (or lack thereof) will move the pair in either direction. If U.S. and Chinese officials offer optimistic projections, EUR/USD will return to the 1.10–1.11 level. Negative signals (leaks, rumors), or the continued absence of information, will work against the dollar—in that case, the pair could either return to the 1.13–1.14 range or remain stuck around 1.12 if the silence persists.