The euro started the week with losses, falling to two-month lows near the 1.1500 level against the dollar. The main driver remains the strengthening of the US currency following a strong labor market report: May employment significantly exceeded expectations, prompting investors to revise their outlook on future Federal Reserve policy.
At the same time, demand for safe-haven assets increased amid escalating tensions in the Middle East, further supporting the dollar.
Eurozone economy raises concerns
Pressure on the euro is intensifying due to a deteriorating economic outlook in the eurozone. Recent data showed a contraction in GDP for the region in the first quarter of 2026, increasing concerns about the sustainability of the economic recovery. At the same time, business and consumer expectations remain subdued, and growth prospects appear significantly weaker than in the United States.
ECB prepares for decision, but market remains skeptical
Investors are now fully focused on the European Central Bank meeting on June 11. The market expects a 25 basis point rate hike; however, this move is already priced in. For the euro, what matters more are Christine Lagarde’s comments regarding future policy steps. If the ECB fails to provide clear signals about further tightening, pressure on the single currency may persist even after the rate hike.
Near-term outlook
In the near term, EUR/USD is likely to remain under pressure. A break below the strong support around 1.1600 suggests a move toward 1.1480–1.1460, where moderate buying interest may emerge. Pullbacks toward 1.1600 could be used as selling opportunities.
My outlook on the euro, as I previously noted in Euro holds key support as market awaits ECB signals, remains bearish.
Latest EUR/USD News
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