EUR/USD: Euro on a mild correction mode, but remains above 1,1700 level

The single European currency is trading in a mild tone after three days of upward movement as further rise and approach to 1,20 levels remains a significant challenge.

The overall market picture has not changed significantly, with the issue of trade tariffs and central bank decisions regarding interest rates remaining at the top of investors' agendas and will determine the course of the exchange rate in the second half of the year.

Some  large investment houses see a continuation of the upward momentum of the European currency and for the second half of 2025, giving predictions for levels close to 1.25, but something about which I have several doubts.

The sluggish growth of the European economy combined with the possible imposition of trade tariffs by the United States is likely to create a critical dilemma regarding the exchange rate of the European currency, and levels well above 1.20 are likely to be considered problematic.

While at the same time the US dollar continues to offer much better interest rates and this gap in favor of US dollar is most likely to remain on the table for the coming months.

The confrontation between President Trump and Fed President Powell remains in the spotlight. Rumors of a possible removal of President Powell persist, but so far such a scenario does not seem the most  likely.

Today's agenda is relatively weak, reinforcing the possibility of a narrow trading range in the exchange rate.

I prefer to remain in a wait-and-see position, but I am keeping the thought of a possible purchase of the US currency at the threshold of 1.20 as I estimate that a new wave of consolidation will appear and the pair will have to digest the new levels before the next move.