Monday's (February 23) euro/dollar exchange rate was like a rollercoaster ride. It opened sharply higher, seemingly fueled by weekend news, but this was short-lived. As selling pressure surged after the US stock market opened, global risk appetite cooled rapidly, and funds flocked to the dollar for safety. This sudden surge in safe-haven demand extinguished the euro's upward momentum, causing the pair to reverse course from its intraday high and ultimately close almost back to Friday's starting point. Entering Tuesday's Asian and European sessions, the euro, showing clear signs of weakness, continued to hover below 1.1800, with prices hovering around 1.1780. The market was mired in uncertainty, with bulls and bears locked in a fierce tug-of-war.



While the US Supreme Court's ruling on tariffs triggered a brief sell-off in the dollar, this weakness was short-lived. President Trump immediately responded by announcing a uniform 15% tariff rate on all foreign currencies, quickly shifting market focus from the legal ruling to a new round of macroeconomic shocks. Analysts believe the dollar's decline following the ruling has been fully recovered, and major exchange rate pairs have returned to their original levels. The market is currently torn between two forces: fear of fiscal uncertainty and the hedging effect of the new tariff policy. This conflicting sentiment makes the foreign exchange market exceptionally volatile.

Trade negotiations came to an abrupt halt, further exacerbating the euro's fundamentals.

Just as the dollar was rallying, news from Europe poured cold water on the euro's fundamentals. The European Parliament abruptly decided on Monday to postpone the vote on the EU-US trade agreement originally scheduled for Tuesday. This unexpected turn of events means the EU has temporarily suspended the ratification process and is instead urgently assessing the substantive impact of Trump's new tariff policies on the existing negotiation framework. This move not only sharply intensified market concerns about the future of EU-US trade relations but also directly weakened the core logic supporting the euro's strength. In the complex game of tariffs, the EU seems somewhat passive, and what was initially expected to be a positive development has instantly turned into an unresolved risk.

The current situation is far more complex than anticipated. On one hand, American companies have begun pursuing legal avenues to recover tariffs already paid, and legal uncertainty will continue to plague the market. On the other hand, governments are being forced to reassess the value of investment agreements signed with the United States. Trump has bluntly warned countries that "trying to play tricks" will face harsher penalties, a statement widely seen as targeting the European Union. If the unified tariff is ultimately set at 15% plus existing rates, the global trade landscape will be reshaped. Under this high-pressure environment, the chain reaction triggered by the Supreme Court ruling continues to unfold, the uncertainty facing the US dollar is unlikely to dissipate in the short term, and the euro appears to be faltering due to a lack of clear positive support.

In the US, according to the CME FedWatch Tool, the market's probability of a March rate cut has dropped to almost zero, while the probability of keeping rates unchanged in April is as high as 80%. This indicates that overall pricing has shifted towards the Fed maintaining its current policy stance. Analysts believe that if the Fed signals a tightening stance, the euro will find it difficult to mount an effective counterattack under the dual pressure of tariffs and interest rate advantages. Conversely, if officials adopt a dovish tone, it might provide a brief respite for the weary bulls.

Technical warnings are sounding; key levels will determine survival.

From a technical chart perspective, the euro's position against the US dollar is not optimistic. Previously, the price surged from around 1.1576 to a high of 1.2081, a cumulative gain of over 500 basis points. However, buying pressure quickly weakened after the strong upward move, and the euro is currently in a wide-range correction phase. The levels of 1.1900 and 1.1850 have formed two strong resistance walls, with multiple rebounds failing and falling back at these levels. The key support level is located near the recent low of 1.1741. If this level is breached, the bears will open up further downside potential, and the euro may face a deeper correction.



Technical indicators are also signaling a bearish bias. The MACD indicator shows the fast line still below the slow line, with a negative histogram value, indicating weak short-term momentum and a lack of strength for a decisive bullish counterattack. The RSI indicator is around 46.88, below the 50 midline but not yet in oversold territory, suggesting further downside potential and a gradual bottoming-out pattern. In summary, if the euro can hold the 1.1741 support level, a technical rebound is possible; however, if the tariff situation continues to escalate or the Federal Reserve releases hawkish signals, the resistance above 1.1800 will solidify further.