The penultimate week of July lies ahead. The economic calendar for the upcoming week is not saturated with major events for EUR/USD traders. The main focus will be Thursday's European Central Bank meeting. PMI and IFO indices will also be in the spotlight. In theory, the euro should set the tone for trading, reacting to its fundamental drivers, while the dollar will play a secondary role. However, aside from calendar events, there are also off-calendar developments that are less predictable yet often more impactful for dollar pairs. As a result, the greenback is likely to continue setting the tone for EUR/USD.
Tariffs are back on the agenda. With less than two weeks remaining before the announced August 1 deadline, market tensions will likely intensify. Donald Trump already announced the size of individual tariffs in early July, stating that he would not extend the current preferential regime with the universal 10% rate. Thus, the "negotiation track" will heavily influence EUR/USD and other dollar pairs. If the U.S. manages to strike deals with major trading partners (EU, Japan, India, Canada, South Korea), risk appetite could significantly increase, and EUR/USD buyers might once again test the 1.17 area.
However, at this point, there are no objective grounds for such a happy ending. On the contrary, according to the Financial Times, Donald Trump has made new demands in negotiations with the EU, proposing a minimum tariff on all European goods ranging from 15% to 20%. He also insists on keeping the current 25% tariffs on European cars.
If the U.S. fails to finalize deals, EUR/USD could come under significant pressure amid growing risk-off sentiment.
Traders will also monitor the ongoing controversy over the Federal Reserve headquarters renovation, which centers on Fed Chair Jerome Powell. The White House continues to hint at the misuse of funds (even though the funds in question belong to the Fed, not the federal budget), and a member of the House of Representatives has even accused Powell of perjury before Congress, alleging that he assured lawmakers the renovation wouldn't involve luxury installations.
If this scandal escalates, or if Trump announces Powell's successor (an unlikely but not impossible scenario), the dollar could face additional pressure due to concerns over the Fed's independence.
Now, turning to scheduled, or "calendar-based," events of the upcoming week:
The most important event is the July European Central Bank meeting, scheduled for Thursday, July 24. On the one hand, the outcome is largely predetermined—according to all 84 leading economists surveyed by Reuters, the central bank is expected to maintain its monetary policy settings unchanged. Given ongoing uncertainty in trade policy (especially if a U.S.-EU deal is not reached by then), the ECB is likely to adopt a cautious stance while aiming to strike a balanced tone. While rates will likely remain unchanged, the central bank may hint at another round of monetary easing later this year if conditions worsen.
The euro will only gain support from the ECB if the central bank adopts a more hawkish—or more accurately, a strongly wait-and-see—tone. For example, repeating the rhetoric of Isabel Schnabel, who recently said the bar for another rate cut is "very high." If Christine Lagarde's statements and the final communique reflect this stance, EUR/USD buyers could mount a counterattack, driven by the strength of the euro.
The most important macroeconomic reports of the week will be the PMI and IFO indices. The PMIs could significantly impact EUR/USD if they move into expansion territory. According to preliminary forecasts, Germany's manufacturing PMI is expected to rise to 49.4 (after a previous increase to 49.0), while the services PMI is projected to cross the key 50-point threshold and reach 50.2 (after a sharp rise to 49.7 last month). A similar trend is expected for the euro area as a whole: manufacturing PMI at 49.9 and services at 50.9. For EUR/USD bulls, these indicators must land in the "green zone," especially manufacturing.
IFO indices, due the next day (July 25), could add to the fundamental picture—provided that PMI results exceed expectations. According to most analysts, Germany's business climate indicator is expected to rise to 89.2, the highest level since July last year. The index has shown consistent growth for six months, and July may mark the seventh consecutive month of growth. The IFO business expectations index is also forecast to rise to 89.2 from its previous level of 88.4.
It is also worth watching the U.S. manufacturing and services PMIs. Forecasts suggest both indices will show a slight decline but remain in expansion territory. For dollar bulls, both must stay above the 50-point level.
From a technical standpoint, EUR/USD is trading within a nearly 100-point range between 1.1560 and 1.1650, repeatedly rebounding from both boundaries. The lower boundary aligns with the lower Bollinger Bands line on the H4 chart, and the upper boundary aligns with the upper Bollinger Bands line on the same timeframe. Currently, there are no clear signals favoring either a bullish or bearish scenario. On the H4 chart, the price sits on the midline of the Bollinger Bands, below the Kumo cloud, and between the Tenkan-sen and Kijun-sen lines. On the daily chart (D1), it sits between the midline and lower Bollinger Bands line, above the Kumo cloud, but right on the Tenkan-sen and Kijun-sen.
