On the 4-hour chart, EUR/USD recovered to 1.1405 after a sharp decline into the 1.1330-1.1350 area. The rebound looks more like a corrective move, as the price remains below the key 1.1450-1.1480 zone, which previously acted as support and has now become the nearest resistance.
Moving averages are pointing lower, so sellers still hold the short-term advantage.
Dollar pressure
The main factor weighing on the euro is the strong dollar, driven by expectations that the Fed may maintain a tight policy stance. Fresh US PCE inflation data confirmed that price pressure remains above the Fed’s target, although the market has partly scaled back the most aggressive expectations after the drop in oil prices. This limits EUR/USD’s recovery potential.
ECB stance
The euro is also being restrained by the ECB’s caution. After the June 11 rate hike, the market is assessing how far the regulator is ready to go, considering the decline in eurozone inflation expectations and easing energy risks. If the ECB does not send stronger hawkish signals, euro buyers may struggle to secure a break above 1.1450.
Chart scenario
As long as the pair trades below 1.1450-1.1480, the rise should be viewed as a technical rebound from oversold conditions. A return above this zone would improve the outlook and open the way toward 1.1550-1.1600. If the price falls back below 1.1370, pressure may quickly return, with a retest of 1.1330 and the psychological 1.1300 area.
Conclusion
The baseline scenario for EUR/USD remains cautiously negative. The chart shows an attempt to recover, but for a reversal, buyers need to push the price back above the broken resistance zone. Until then, the pair remains vulnerable to renewed selling amid a strong dollar and uncertainty over the ECB’s next steps, so bears may become active again on a move toward 1.1440-1.1480.
As I already noted in EUR/USD breaks support as strong dollar and PCE caution weigh, the outlook for the pair remains negative.
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