04.07.202509:55 Forex Analysis & Reviews: The Market is Preparing for Another Shock

Just yesterday, U.S. President Donald Trump announced that his administration would begin sending letters to trade partners on Friday, outlining unilateral tariff rates that, according to him, countries will be required to pay starting August 1.

Trump told reporters that around 12 letters would be sent today to key partners, with the rest to follow over the next few days. "I think by the ninth they'll all be sent," Trump added, referring to July 9, the original deadline he set for countries to reach agreements with the U.S. "The tariffs will range from 10% to 70%," he said.

If formalized, the upper end of that range would exceed any of the tariffs initially mentioned by the president during his "Liberation Day" announcement in early April. Those originally ranged from a 10% base rate for most economies to a maximum of 50%. Trump did not specify which countries would be subject to which rates or whether certain goods would be taxed at higher rates than others.

It's worth noting that Trump has repeatedly threatened to impose the highest rates on countries that fail to reach agreements with the U.S. by next week's deadline. The president first announced the increase of so-called reciprocal tariffs on April 2 but then paused their implementation for 90 days to allow for negotiations, during which a 10% rate was applied. So far, the Trump administration has announced deals with the United Kingdom and Vietnam and agreed to a truce with China, under which the two largest economies eased reciprocal tariffs.

Asked on Thursday whether more deals were expected, Trump replied, "We've got a couple more deals, but, you know, I'm leaning toward just sending the letters and telling them what tariffs they'll be paying. It's much simpler."

This week, Trump announced an agreement with Vietnam on Wednesday, stating that the U.S. would impose a 20% tariff on Vietnamese exports to the U.S. and a 40% rate on goods considered to be transshipped through the country.

However, many major trade partners, such as Japan, South Korea, and the European Union, are still working toward agreements. The president expressed optimism about a potential deal with India but was sharply critical of Japan, calling Tokyo a difficult negotiating partner. This week, he escalated that criticism, stating that "Japan should be made to pay 35%."

On Tuesday, the president also said he was not considering extending next week's deadline. However, U.S. Treasury Secretary Scott Bessent said yesterday that Trump would make the final decision later. "We'll do what the president wants, and it's up to him to decide whether negotiations are in good faith or if it's time to close the matter," Bessent said.

As for the current technical outlook on EUR/USD, buyers need to focus on reclaiming the 1.1790 level. Only then will a test of 1.1825 become possible. From there, a rise to 1.1866 may follow, though reaching that level without support from large players could prove difficult. The furthest target remains the 1.1910 high. In the event of a decline, I expect significant buyer interest only around 1.1750. If there is no support there, it may be best to wait for a retest of the 1.1715 low or consider long positions from 1.1675.

As for the GBP/USD technical setup, pound buyers need to break above the nearest resistance at 1.3675. Only then can they aim for 1.3705, above which further gains will be harder to achieve. The furthest target would be the 1.3746 level. If the pair declines, bears will attempt to regain control at 1.3635. A successful break below this range would deal a serious blow to bulls and push GBP/USD toward the 1.3600 low, with a possible move toward 1.3565.