EUR/USD breaks 1.1600 as EU prepares tariff retaliation vs Trump

EUR/USD surged 0.4% to breach the 1.1600 psychological level, reaching 1.1615 as reports emerged of the European Union preparing retaliatory measures against potential Trump administration tariffs. The euro's strength reflects growing market confidence in Europe's coordinated response to US trade threats, with EU officials reportedly drafting targeted counter-tariffs on American goods. The move represents a significant shift in transatlantic trade dynamics, potentially disrupting global commerce flows. Market participants are positioning for increased trade tensions, which could weigh on global growth prospects while paradoxically supporting the euro as a defensive play. Technical indicators show EUR/USD approaching overbought territory, with immediate resistance at 1.1650 (December highs) and support established at 1.1580. A sustained break above 1.1650 could trigger momentum buying toward 1.1700, while any de-escalation in trade rhetoric might see a pullback to test the 1.1550 area.