EUR/USD remains under pressure following a series of strong U.S. macroeconomic releases and a more hawkish tone from the Federal Reserve. Recent signals from Fed officials have reinforced expectations that interest rates may stay elevated for longer, supporting U.S. Treasury yields and boosting demand for the dollar.
Additional support for the greenback comes from the resilience of the U.S. labor market and persistent inflation risks, both of which reduce the likelihood of near-term monetary easing.
ECB rate hike fails to support the euro
The European Central Bank raised its key interest rate to 2.25% in June, but the move had already been fully priced in by markets. Moreover, policymakers maintained a cautious stance and offered no clear guidance on further tightening. At the same time, the ECB revised its inflation forecasts higher while lowering its growth outlook for the eurozone economy, fueling concerns about the region's economic prospects. As a result, the euro failed to gain meaningful support from the decision.
Technical outlook: sellers remain in control
The pair has broken below the key support zone at 1.1500–1.1520 and slipped to fresh local lows near 1.1450. Major moving averages remain tilted lower and are positioned above current price levels, confirming the prevailing bearish momentum. As long as EUR/USD trades below the 1.1520–1.1550 area, sellers are likely to retain the upper hand. Immediate downside targets are located near 1.1430 and 1.1400, while a move back above 1.1550 would be the first indication that bearish pressure is beginning to ease.
What to watch next
In the near term, EUR/USD will continue to be driven primarily by expectations surrounding future Federal Reserve policy and incoming U.S. inflation and labor market data. As long as markets price in a relatively more restrictive monetary policy path in the United States than in the eurozone, the dollar is likely to remain supported. The baseline outlook remains moderately negative for the euro, with the risk of a test of the 1.1400 area if U.S. economic data continues to outperform expectations, as noted in the previous analysis titled EUR/USD updates local lows and tests key support.
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