The main driver behind the decline in EUR/USD remains the strengthening of the US dollar following the latest signals from the Federal Reserve. The regulator kept interest rates unchanged; however, updated projections and market interpretations of the Fed’s rhetoric have shifted toward a more hawkish monetary policy stance.
Against this backdrop, the US Dollar Index remains near multi-week highs, while Treasury yields continue to support demand for the greenback. An additional factor weighing on the euro is the lack of clear signals from the European Central Bank regarding further monetary tightening following its latest interest rate decision.
Euro loses support after the ECB meeting
Although the ECB recently raised interest rates, the market viewed the decision as insufficiently hawkish. At the same time, the central bank downgraded its economic growth forecasts for the eurozone, limiting the scope for further policy tightening. Analysts note that the interest rate differential between the United States and the eurozone continues to favor the dollar, while ongoing risks to the European economy are restraining demand for the single currency.
Technical outlook: sellers remain in control
EUR/USD continues to trade within a bearish structure. The pair failed to establish a foothold above the 1.1580–1.1600 zone, which previously acted as support and has now turned into resistance. Price remains below the long-term moving average, while a series of lower highs confirms that bearish momentum remains intact. The current decline toward the 1.1490–1.1500 area points to another test of the lower boundary of the range.
Key levels and short-term scenario
The nearest support is located in the 1.1460–1.1480 zone. A break below this area would open the way toward 1.1400–1.1420. To restore more sustainable bullish momentum, the euro needs to secure a move above 1.1580–1.1600, which would then bring the 1.1780–1.1840 area into focus. As long as the dollar continues to receive support from expectations of a more hawkish Federal Reserve, and EUR/USD remains below key medium-term resistance levels, the base-case scenario, as I previously noted in EUR/USD consolidates below resistance as markets await Fed rate decision, remains continued downside pressure with the risk of fresh local lows.
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