**EUR/USD Slides Below 1.1700 as Escalating Tariff Concerns Boost US Dollar to Two-Week High**
*Originally reported by Eren Sengezer for FXStreet. Additional insights sourced from Reuters, Bloomberg, and market analysts.*
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### Introduction
The foreign exchange market has faced significant volatility recently, largely due to growing global trade tensions. On July 11, 2018, the EUR/USD currency pair sharply declined below the psychological 1.1700 level, hitting its lowest in almost two weeks. This move was closely tied to fears about further tariffs from the US against China, which fueled risk aversion and gave a decisive push to the US dollar. Below, we provide a comprehensive analysis of the factors driving this movement, the broader implications for forex markets, and an outlook for the EUR/USD pair.
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### Key Developments
#### US Announces Potential for Additional Tariffs on China
– On July 10, the United States Trade Representative announced the possibility of imposing tariffs on another $200 billion worth of Chinese imports, at a proposed rate of 10%.
– These new tariffs cover a broad range of products, intensifying the already heated trade conflict between Washington and Beijing.
– Market participants feared that China would retaliate, amplifying worries about a full-blown global trade war.
#### Risk Aversion Dominates Markets
– Following the US announcement, global equity markets sold off sharply, with investors seeking haven assets.
– Safe-haven flows predominantly favored the US dollar and the Japanese yen.
– The US Dollar Index (DXY) surged over the session, reaching a two-week high around 94.75.
#### EUR/USD Pair Tumbles
– EUR/USD broke below the 1.1700 support level, sliding toward 1.1660 in afternoon trading.
– The pair had started the week on a relatively firm footing, but the sudden pickup in risk aversion reversed earlier gains.
– According to Eren Sengezer (FXStreet), the primary driver of this move was the resurgent demand for the greenback amid escalating trade war concerns.
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### Supporting Factors for US Dollar Strength
#### Trade Tensions Drive Safe-Haven Demand
– Investors flocked to the US dollar for its perceived stability amid global turmoil.
– Concerns over global growth and earnings weighed on riskier assets, such as emerging market currencies and stocks.
#### Solid US Economic Data
– Recent economic indicators from the US showed continued strength, supporting the case for further Federal Reserve rate hikes.
– June’s Producer Price Index (PPI) climbed 0.3% versus expectations of 0.2%, reaching an annual increase of 3.4%—its highest since November 2011.
– Expectations for tighter US monetary policy further boosted dollar demand.
#### Hawkish Federal Reserve Tone
– Minutes from the latest Federal Reserve policy meeting indicated that members see the US economy as strong and continue to support gradual interest rate increases.
– Fed Chair Jerome
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