"A celebration with tears in our eyes" — that's perhaps the most accurate way to describe the European reaction to the trade agreement signed between the U.S. and the EU. European Commission President Ursula von der Leyen came under heavy criticism — almost no one spared the signed deal from reproach.

For instance, French Prime Minister Francois Bayrou wrote on social media that Europe is "going through dark times when free European peoples have chosen to submit." Italian Prime Minister Giorgia Meloni provided a cautious assessment of the agreement, noting that she now expects Brussels to support the sectors of the economy that will be affected by the 15% tariffs. Chair of the European Parliament's Trade Committee Bernd Lange, in turn, stated that the EU had to make "painful concessions," and he is "far from enthusiastic about the agreement reached."

Even von der Leyen's fellow party members did not support the deal. According to a spokesperson for the European People's Party (EPP), the 15% tariff represents "a flagrant violation of fair trade principles and a major blow to the competitiveness of European goods."

Business representatives across Europe also criticized the deal. German industrialists described it as an "inadequate compromise." Members of Germany's Industrial Union noted that the only positive aspect is that Europe managed to avoid further escalation in the tariff confrontation. The German Chemical Industry Association, the Federation of International Trade, and the IFO Institute for Economic Research echoed similar sentiments.

The EUR/USD pair reacted accordingly. After a modest 15-point rise at the market open, the pair plunged nearly 200 points.

This leads to the key question: is this a correction or the beginning of a full-fledged trend reversal?

First, it's important to recall that this is far from the first "crisis" for EUR/USD buyers in recent times. If we examine the W1 timeframe, we can see that at the start of July, the pair declined steadily for almost two weeks, falling from the 1.1830 level (a four-year high) to 1.1558. Notably, many analysts at the time also spoke of "early signs of a trend reversal"—right up until buyers regained nearly all lost ground the following week. A 230-point drop was erased in just a few days.

Second, we must remember that several crucial U.S. macroeconomic reports will be released in the coming days, which will shift traders' focus. In addition, the Federal Reserve's July meeting, the outcome of which will be announced this Wednesday, is approaching.

All of these fundamental factors could significantly impact the value of the U.S. dollar. If the upcoming data disappoints and the Fed takes a more dovish stance than markets currently expect, the US dollar will come under pressure, and the EUR/USD pair could return to its previous levels.

This week's key releases include:

• U.S. labor market data (JOLTs, ADP, Nonfarm Payrolls),
• Inflation metrics (Core PCE index, University of Michigan Consumer Sentiment Index and inflation expectations),
• Other macro indicators (U.S. GDP growth, Conference Board consumer confidence index, and ISM manufacturing index).

Preliminary forecasts suggest a weak labor market performance, with unemployment expected to rise to 4.2% and employment growth projected to total just 108,000.

At the same time, the U.S. economy is projected to show strong growth in Q2, with GDP expected to rise by 2.4% after contracting by 0.5% in Q1. The Conference Board's consumer confidence index is also forecast to improve, reaching 95.9. The core PCE price index is projected to accelerate to 2.8% YoY in June (up from 2.7% previously).

As we can see, most forecasts are quite strong—so there are no low expectations "priced in." Therefore, if the week's key data turns out to be weak (i.e., in the red), the dollar could come under serious pressure. Moreover, the Fed might use the July meeting to give a "green light" to a rate cut in September, which is not currently the base-case scenario (according to CME FedWatch, the probability of a hold in September stands at nearly 40%).

In summary, despite the strong bearish impulse in EUR/USD, it is still too early to speak of a complete trend reversal. Again, it's worth recalling that the previous correction bottomed at 1.1558, having started from 1.1830.

However, opening long positions in EUR/USD at this time is not advisable, as the market has not yet fully factored in the current fundamental narrative. The key level to watch is 1.1560 (the lower line of the Bollinger Bands on the daily chart). If bears break through this level, the next downside target will be 1.1480 (the upper boundary of the Kumo cloud on D1). Conversely, if the downward momentum fades around 1.1560, long positions will again be favored, with initial targets at 1.1640 and 1.1670 (Kijun-sen and Tenkan-sen lines on D1, respectively).