EUR/USD remains under pressure and trades near 1.1350 after breaking the key 1.1400-1.1470 support zone on the 4-hour chart. The dollar keeps its advantage amid expectations of a more hawkish Fed stance, while the euro is struggling to find sustained support even after the ECB’s June rate hike.
Fed and dollar
The Fed left the target range at 3.50%-3.75% on June 17 but stressed that inflation remains above target and that US economic activity continues to expand at a solid pace. The market is now closely watching fresh PCE data, as stronger inflation could reinforce expectations of another rate hike later this year and support the dollar.
ECB and euro
The ECB has also toughened its tone. Current rates stand at 2.25% for the deposit facility and 2.40% for main refinancing operations, while Isabel Schnabel said that, from the current perspective, rates will probably need to rise further. However, the effect on the euro is limited, as the market is reacting more to eurozone economic weakness, energy risks and the dollar’s yield advantage.
Technical picture from the chart
On the chart, EUR/USD has settled below the former 1.1400-1.1470 support zone, which is now turning into resistance. Moving averages are pointing lower, confirming the bearish impulse. The nearest support is located around 1.1320-1.1300, and a break below it would open the way toward 1.1250. For recovery, buyers need to push the pair back above 1.1400 and then consolidate above 1.1470.
Conclusion
The short-term balance remains in favor of sellers. As long as EUR/USD trades below 1.1400-1.1470, rebounds look mostly technical, while the base scenario, as noted in EUR/USD slips below key support as dollar strength holds, points to pressure toward 1.1300. Only weaker US inflation data or a clear decline in dollar demand could soften the bearish scenario.
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