ABN AMRO’s Georgette Boele notes that the Euro’s relationship with energy prices has evolved, with recent Oil and Gas gains again weighing on EUR/USD. Earlier in the US-Iran conflict, higher energy prices hurt the Euro (EUR), but later the pair became more driven by Federal Reserve (Fed) and European Central Bank (ECB) expectations. She now sees EUR/USD guided by central bank expectations, yield spreads and Eurozone energy risks.
Euro sensitivity returns to energy moves"At the start of the US-Iran conflict, higher energy prices weighed on the euro against the US dollar. During the conflict, however, EUR/USD became less sensitive to energy prices and more sensitive to expectations for the Fed and the ECB."
"When a Memorandum of Understanding was announced, energy prices fell sharply, but the euro gained little against the US dollar because markets were focused on expectations of Fed rate hikes."
"As a result, oil and gas prices rose strongly, supporting the currencies of energy exporters such as the Norwegian krone, Canadian dollar and US dollar. At the same time, currencies of energy importers weakened."
"The euro again declined against the US dollar as energy prices rose."
"Going forward, the direction in EUR/USD will depend on expectations for the Fed and the ECB, inflation expectations, changes in nominal and real yield spreads between the US and Europe, and perceptions of possible energy shortages in the eurozone."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Key Points:EUR/USD pulled back as traders reacted to the strong rally in the oil markets. USD/CAD moved lower despite the pullback in precious metals markets. USD/JPY gained ground, supported by rising Treasury yields.
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U.S. Dollar Moves Higher As Oil Prices Gain 5%
DXY 080726 4h Chart U.S. Dollar Index gains ground as traders prepare for the release of FOMC Minites and react to rising tensions in the Middle East.
President Trump said that U.S. could launch strikes against Iran and resume the blockade of country’s ports. Oil prices are up by more than 5% as traders react to the surprising escalation between U.S. and Iran. Rising oil prices could force Fed to be more hawkish, which is bullish for the American currency.
Currently, U.S. Dollar Index is trying to settle above the resistance at 101.15 – 101.30. In case this attempt is successful, U.S. Dollar Index will head towards the next resistance level, which is located in the 101.80 – 101.95 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in the near term.
EUR/USD Retreats Amid Worries About Hawkish Fed EUR/USD 080726 4h Chart EUR/USD is losing ground as traders focus on the strong rally in the oil markets. Demand for risk assets declined amid inflation fears, which was bearish for the European currency.
EUR/USD settled below the 50 MA at 1.1414 and is trying to settle below the 1.1400 level. If EUR/USD settles below 1.1400, it will head towards the support level, which is located in the 1.1350 – 1.1365 range.
GBP/USD Rebounds From Session Lows GBP/USD 080726 4h Chart GBP/USD is swinging between gains and losses as traders focus on geopolitical tensions and evaluate their next moves.
In case GBP/USD manages to settle above the support level at 1.3335 – 1.3350, it will head towards the next resistance, which is located in the 1.3450 – 1.3465 range.
USD/CAD 080726 4h Chart USD/CAD is losing some ground despite the strong pullback in precious metals markets. Gold is down by -1.5%, while silver pulled back by -4%. Other commodity-related currencies are mixed in today’s trading session.
In case USD/CAD stays below the 50 MA at 1.4203, it will head towards the nearest support level, which is located in the 1.4125 – 1.4140.
On the upside, a move above the 50 MA will push USD/CAD towards the resistance at 1.4225 – 1.4240. In case USD/CAD climbs above the 1.4240 level, it will head towards the next resistance, which is located in the 1.4335 – 1.4350 range.
USD/JPY Gains Ground As Treasury Yields Rise USD/JPY 080726 4h Chart USD/JPY is moving higher as traders focus on rising Treasury yields. The yield of 2-year Treasuries moved above the 4.23% level, while the yield of 10-year Treasuries settled above 4.58%. Treasury yields are rising as traders react to recent developments in the Middle East and bet on hawkish Fed. In case oil prices continue to move higher, the Japanese yen will find itself under additional pressure.
From the technical point of view, USD/JPY settled above the resistance at 161.50 – 162.00 and is moving towards multi-decade highs near 162.80. In case USD/JPY settles above the 162.80 level, it will head towards the 165.00 level. It remains to be seen whether the Bank of Japan is ready to intervene as yen’s fundamentals are extremely bearish. Previous attempts to support the yen yielded no results.
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Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
EUR/USD forecast remains uncertain as renewed US-Iran tensions sends oil higher FOMC minutes coming up but market’s attention is on developments in the Middle East again EUR/USD selling contained relative as it holds inside bear flag Oil returns to the forefront of currency markets The EUR/USD edged only slightly lower, showing surprising resilience for now while European equity markets took the brunt of the sell-off, as tensions in the Middle East made an unwelcome return with renewed intensity. A sharp rebound in crude oil prices has quickly become the dominant market theme again, overshadowing economic data and forcing investors back into defensive positions.
Will tensions de-escalate quicker this time? Well, it is tough to say. Already, Trump has announced they will probably strike Iran again tonight. There will be retaliation from Tehran and things could get quite messy very quickly. Trump’s latest comments certainly don’t point to any de-escalation after he effectively dashed hopes that recent diplomatic progress could continue, reviving concerns over potential disruptions to global energy supplies.
Whether events develop into a prolonged confrontation remains uncertain. There is still scope for political rhetoric to soften over the coming days, but for now traders are once again having to price in geopolitical risk. That naturally favours the US dollar while simultaneously weighing on risk-sensitive assets, including European equities and the euro. Europe also relies heavily on energy imports, which makes the euro even more vulnerable.
The prospect of renewed disruption around the Strait of Hormuz also keeps stagflation risks firmly on investors’ radar. Higher energy prices would complicate the outlook for central banks at a time when many had been preparing for a more benign inflation environment.
EUR/USD forecast: US rates expectations remain supportive for dollar Against this backdrop, the publication of the latest Federal Reserve meeting minutes may struggle to attract its usual level of attention. Markets already have a fairly clear understanding of the Fed’s position, with policymakers remaining cautious about inflation risks.
If oil prices remain elevated, inflation expectations could become more persistent, giving the Fed more reason to keep policy restrictive for longer, and deliver some rate hikes later this year. That view continues to support US Treasury yields, maintaining one of the dollar’s strongest advantages over its major counterparts. This explains why, despite relatively resilient European economic data, investors have continued to favour the greenback lately.
EUR/USD technical analysis: bear flagging From a technical perspective, the EUR/USD forecast continues to point lower, even if we haven’t seen an immediate drop amid the geopolitical uncertainty yet. But with the pair showing a potential bear flag in the making, the pressure remains.
Source: TradingView.com The 1.1400 area remains an important near-term support level to watch on the daily EUR/USD chart. A decisive break beneath that zone would expose the 1.1300 handle.
On the upside, resistance around 1.1450 continues to cap advances. A sustained move above that level would shift attention towards the psychological 1.1500 mark, with 1.1575 representing the next significant upside objective.
In summary For the time being, however, the fundamental backdrop offers little justification for a sustained recovery. Unless incoming US economic data begins to weaken convincingly or expectations surrounding Fed policy changes materially, say as a result of significantly weaker oil prices (again, unlikely), the dollar’s combination of higher yields and safe-haven demand is likely to keep rallies in EUR/USD relatively limited. That leaves the broader EUR/USD forecast cautiously bearish over the near term.
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The Euro (EUR) shows marginal losses against the US Dollar (USD) on Wednesday and has returned to levels just above 1.1400 during the European trading session after rejection at 1.1430. A new round of hostilities in Iran and investors’ cautiousness ahead of the release of the minutes of the latest Federal Reserve (Fed) meeting are keeping Euro bulls in check.
US President Donald Trump affirmed earlier on Wednesday that the ceasefire is over and that, in his view, the memorandum of understanding is no longer in effect. These comments follow a fresh bout of reciprocal attacks between the US and Iran, and the revocation of the US authorisation to sell Iranian Oil.
The market reaction has been tame so far, as investors continue to view these events as manoeuvres to gain leverage in the negotiation process. Beyond that, investors remain wary of placing large directional bets on the USD ahead of the release of the minutes of June’s Fed meeting, eager for further insight into the central bank’s monetary policy plans.
Technical Analysis: A potential bearish flag is in progress
EUR/USD trades at 1.1405, at the bottom of the immediate ascending channel, that might turn out to be a bearish flag formation. Momentum indicators in four-hour charts are turning bearish, with the Relative Strength Index (14) easing toward 44, and the Moving Average Convergence Divergence (MACD) slipping back into slightly negative territory, suggesting that bullish attempts are losing traction.
A break of the channel bottom and Tuesday's low at 1.1400 would boost expectations of a bearish flag formation that would be confirmed below the late June lows in the 1.1325-1.1330 area. The pattern's measured target is just below the late May 2025 low, at 1.1210.
On the topside, Tuesday's highs around 1.1459 and last week's trading peak in the area of 1.1475 are likely to challenge bulls in case of a positive reaction. An unlikely breach of those levels would clear the path towards the mid-June highs, near 1.1620.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price This week The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
USDEURGBPJPYCADAUDNZDCHFUSD0.24%0.05%0.70%-0.24%0.23%0.24%0.54%EUR-0.24%-0.22%0.43%-0.52%0.00%-0.03%0.24%GBP-0.05%0.22%0.54%-0.30%0.23%0.19%0.45%JPY-0.70%-0.43%-0.54%-0.96%-0.35%-0.41%-0.19%CAD0.24%0.52%0.30%0.96%0.59%0.55%0.76%AUD-0.23%-0.01%-0.23%0.35%-0.59%-0.05%0.22%NZD-0.24%0.03%-0.19%0.41%-0.55%0.05%0.27%CHF-0.54%-0.24%-0.45%0.19%-0.76%-0.22%-0.27% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Key Points:Markets are awaiting today’s FOMC meeting minutes for fresh clues on the Fed’s policy stance amid sticky inflation.DXY held at $101.04 with green continuation candles retesting Fibonacci 0.618 level.EUR/USD defended $1.1418 blue trendline support with green rejection candles absorbing selling pressure.GBP/USD held $1.3360 resistance zone, testing key levels with mixed candles and neutral momentum.
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Dollar, Euro and Pound Navigate Divergent Central Bank Paths On July 8, the dollar, euro, and sterling were underpinned by different monetary policy settings and economic conditions. Core inflation has remained elevated in the U.S., meaning the Fed is disinclined to ease rates in any near term, keeping a more hawkish setting and dollar attractive as a reserve currency, alongside a strong economy and fiscal balance sheet.
The euro was hampered by heterogeneous growth across the euro zone as the ECB looks to keep inflation expectations anchored. Divergent fiscal settings and inflation rates in the bloc add to a transmission effect, making the currency more data and wage-dependent.
Sterling is caught between sticky services inflation and weaker growth, with the BoE weighing the labour market data and fiscal policy. The relative policy stance of the Fed, ECB and BoE is likely to continue to underpin cross-rates.
All in all, different inflation trajectories, fiscal positions and economic resiliencies will likely lead to two-way risk in the currencies, with other variables like trade balances and capital flows likely to contribute to currency dispersion.
DXY Holds $101.04 – Fibonacci 0.618 Retest on 4h Dollar Index Price Chart – Source: Tradingview DXY is trading at $101.04 on the 4-hour time frame. The 4-hour candles, which are colored mixed red and green, retested the .618 Fib level at $100.31 following a massive breakout off the $97.67 swing low. The candles with bullish color and higher highs indicate buyers continue to respect the 50ema at $101.02. The RSI is near 52 with neutral momentum.
In terms of volume profile, the breakout pivot is around $100.59 to $101.06. The .618 Fib suggests that $103.09 will be the next upside target in the next few weeks. Above $100.59, the price action is in a clean, strongly bullish channel. The higher highs and higher lows pattern indicates that buyers are firmly in control.
Trade Idea: Buy $101.04, targeting $103.09, with a stop at $100.59.
GBP/USD Holds $1.3360 – White Descending Trendline Test on 4h GBP/USD Price Chart – Source: Tradingview The GBP/USD is trading at $1.3360 on the 4-hour time frame. The 4-hour candles, which are colored mixed red and green, tested the white trendline at $1.3380 after rejection of the red ma at $1.337. The 4-hour candle with a bullish wick indicates the absorption of buy orders at the resistance, and the 4-hour candles maintain higher highs.
The RSI is near 57 with neutral momentum. In terms of volume profile, the pivot cluster is at $1.331 to $1.338. The next support level is expected to be in the $1.325 to $1.331 area. Within the overall trading range, the price is in a neutral to bullish structure above the trendline, with higher highs indicating that buyers are active on dips.
Trade Idea: Buy $1.3360, targeting $1.345, with a stop at $1.325.
EUR/USD Holds $1.1418 – EMA 50 Defense on 4h EUR/USD Price Chart – Source: Tradingview The EUR/USD is trading at $1.1418 on the 4-hour time frame. The 4-hour candles, which are colored mixed red and green, defended the 50ema at $1.1423 after rejection of the red ma at $1.162. The 4-hour candle with a bullish wick indicates the absorption of buy orders, and the 4-hour candles maintain higher lows. The RSI is near 50 with neutral momentum.
In terms of volume profile, the pivot cluster is at $1.140 to $1.150. The next resistance level is expected to be in the $1.155 to $1.162 area. Despite a downtrend, the price is in a neutral to bullish structure above the 50ema, with higher lows indicating that buyers are active on dips.
Trade Idea: Buy $1.1418, targeting $1.155, with a stop at $1.140.
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Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.
United Overseas Bank’s (UOB) Quek Ser Leang highlights EUR/USD’s failure to extend its recent advance, with momentum fading after a retreat from recent highs. The pair is now seen oscillating between 1.1360 and 1.1450 in coming weeks, while intraday price action may test 1.1390 without threatening the more important 1.1360 support unless the 1.1430 resistance breaks.
Momentum fades into sideways pattern"24-HOUR VIEW: Two days ago, EUR traded within a range of 1.1408/1.1444 and closed largely unchanged at 1.1440 (+0.04%). Yesterday, we stated that we “continue to expect range-trading, but the firmer underlying tone suggests EUR is likely to trade in a higher range of 1.1425/1.1470.” Our assessments turned out to be incorrect, as EUR fell to a low of 1.1407. Despite the relatively sharp decline, downward momentum has not increased much. However, there is scope for EUR to dip below 1.1390. The major support at 1.1360 is unlikely to come into view. Resistance is at 1.1420; a breach of 1.1430 would indicate that the immediate downward pressure has eased."
"1-3 WEEKS VIEW: Our most recent narrative was from last Friday (03 Jul, spot at 1.1430), when we highlighted that “the bias for EUR is tilted to the upside.” We also highlighted that “expect firm resistance at 1.1470 and 1.1500.” EUR has not been able to make much headway on the upside, and yesterday, it retreated to a low of 1.1407. Although our ‘strong support’ level at 1.1390 has not been breached yet, upward momentum has largely faded. EUR has likely moved back into a range-trading phase, and we expect it to trade between 1.1360 and 1.1450 for now."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
EUR/USD maintains its position after registering modest losses in the previous day, trading around 1.1410 during the Asian hours on Wednesday. Traders’ attention is focused on Wednesday's release of the US Federal Reserve (Fed) Meeting Minutes, the first under newly appointed Chairman Kevin Warsh, for crucial clues regarding the future path of US interest rates.
The EUR/USD holds minor gains as the US Dollar (USD) inches lower after experiencing volatility. The Greenback may regain its ground amid rising safe-haven demand and renewing geopolitical tensions. US airstrikes against Iran came in response to Iranian attacks on commercial vessels in the crucial Strait of Hormuz, including a Qatari LNG carrier and a Saudi oil tanker.
Iranian Parliament Speaker Mohammad Bagher Ghalibaf warned that the era of bullying and extortion has ended and insisted that Iran will not fold under pressure. Meanwhile, the country's top joint military command denounced the attacks on southern Iran as blatant aggression, promising a crushing military response. Defiant over the strategic waterway, Tehran reaffirmed that it will block any US interference regarding the control and management of the Strait of Hormuz.
European Central Bank (ECB) rate hike bets rose after board member Isabel Schnabel warned that the Iran conflict keeps core inflation elevated. ECB policymaker and Governor of the Bank of Italy Fabio Panetta warned Eurozone inflation risks remain high due to energy supply uncertainties in the Strait of Hormuz.
ECB’s Panetta scores 6.2/10 on FXS Speechtracker, notably above the historic 4.2/10 baseline, signaling a more impactful intervention than usual. The focus on Strait of Hormuz uncertainty and increasingly frequent supply shocks underscores persistent upside inflation risks, tilting the tone modestly hawkish despite clear concern about downside growth.
By stressing that upside inflation and downside growth risks remain and that the outlook is fragile, the speech reinforces a narrative of constrained policy flexibility. For FX, this mix of inflation vigilance and growth anxiety suggests limited support for the Euro, with markets likely to price in lingering risk premia rather than a confident policy tightening path.
Euro FAQs The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
The American currency gained ground as traders focused on recent events in the Strait of Hormuz.
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U.S. Dollar Moves Higher As Oil Prices Rally
DXY 070726 4h Chart U.S. Dollar Index gains ground as traders focus on the rally in the oil markets. An LNG carrier from Qatar was hit in the Strait of Hormuz. A Saudi oil tanker also suffered damage. Iran insists that ships should go through approved routes.
The nearest resistance level for U.S. Dollar Index is located in the 101.15 – 101.30 range. In case U.S. Dollar Index manages to settle above the 101.30 level, it will head towards the next resistance, which is located in the 101.80 – 101.95 range.
EUR/USD Tests Support At 1.1420 – 1.1435
EUR/USD 070726 4h Chart EUR/USD pulled back as demand for risk assets declined after attacks on vessels in the Strait of Hormuz.
Traders also focused on the Industrial Production report from Germany. The report indicated that Industrial Production increased by +0.9% month-over-month in May, compared to analyst consensus of +0.2%.
Currently, EUR/USD is trying to settle below the support level at 1.1420 – 1.1435. This support level has already been tested several times and proved its strength. In case EUR/USD manages to settle below the 1.1420 level, it will get to the test of the 50 MA at 1.1410. A move below the 50 MA will open the way to the test of the support level at 1.1350 – 1.1365.
GBP/USD Retreats Amid Falling Demand For Risk Assets GBP/USD 070726 4h Chart GBP/USD is losing ground as traders focus on general strength of the American currency.
From the technical point of view, GBP/USD failed to settle above the 1.3400 level and pulled back towards 1.3370. The nearest support level for GBP/USD is located in the 1.3335 – 1.3350 range.
If GBP/USD declines below the 1.3335 level, it will head towards the 50 MA at 1.3285. In case GBP/USD manages to settle below the 50 MA, it will move towards the next support level at 1.3250 – 1.3265.
USD/CAD Tests The 1.4200 Level
USD/CAD 070726 4h Chart USD/CAD remains stuck below the resistance at 1.4225 – 1.4240 as traders focus on the strong rally in the oil markets. Gold and silver are losing ground, which is bearish for the Canadian currency. Other commodity-related currencies are moving lower in today’s trading session.
If USD/CAD settles below the 50 MA at 1.4204, it will head towards the support level at 1.4125 – 1.4140. RSI is in the moderate territory, so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.
On the upside, USD/CAD needs to settle above the resistance level at 1.4225 – 1.4240 to gain upside momentum in the near term. A move above 1.4240 will push USD/CAD towards the next resistance at 1.4335 – 1.4350.
USD/JPY Remains Stuck Near Key Resistance Level USD/JPY 070726 4h Chart USD/JPY is losing some ground as traders react to the Household Spending report from Japan. The report indicated that Household Spending increased by +3.7% month-over-month in May, compared to analyst forecast of +1.4%. On a year-over-year basis, USD/JPY declined by -0.4%, compared to analyst consensus of -2.5%.
The technical picture remains unchanged as USD/JPY is trying to settle above the resistance level at 161.50 – 162.00. If USD/JPY settles above the 162.00 level, it will move towards recent highs near 162.80. A move above the 162.80 level will push USD/JPY towards the 165.00 level.
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Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
Scotiabank strategists Shaun Osborne and Eric Theoret report the Euro (EUR) is slightly softer versus the US Dollar (USD) but supported by a sharp recovery in yield spreads and stronger German industrial production. Renewed hawkishness from European Central Bank (ECB) policymakers is lifting Euro area rate expectations. They see near-term upside for EUR/USD, with technicals pointing to a drift toward 1.15 within a 1.1400–1.1500 range and limited resistance before 1.1580.
Hawkish ECB supports Euro"Bearish/neutral – the recovery in the RSI is important, reflecting a clear fade in bearish momentum and a drift back toward the neutral threshold around 50. The near-term balance of risk appears to favor gains and a drift toward 1.15 and we note the absence of any material resistance ahead of 1.1580. The medium-term trend is flat, and we look to a near-term range bound between 1.1400 and 1.1500."
"The EUR is soft, down a fractional 0.1% vs. the USD as it consolidates within its range from last Thursday with congestion in the mid-1.14s. Tuesday’s releases have been limited to stronger than expected German industrial production data for May (0.9% m/m vs. 0.1% exp.)."
"The outlook for relative central bank policy is providing renewed support for the EUR and yield spreads are showing a sharp recovery from last Wednesday."
"Euro area rate expectations are climbing sharpy, reflecting renewed hawkishness from a range of ECB policymakers, including executive board member Schnabel who specifically pushed back on the idea of softening the central bank’s guidance in response to the latest decline in oil prices."
"We see near-term upside for the EUR as markets reprice their outlooks for both the ECB (higher) and the Fed (lower)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
United Overseas Bank’s (UOB) Quek Ser Leang reports EUR/USD holding near 1.1440 with a firmer underlying tone. The pair is expected to trade slightly higher in a 1.1425–1.1470 range intraday. Over the next 1–3 weeks, the bias remains tilted to the upside as long as Euro stays above strong support at 1.1390, with resistance at 1.1470 and 1.1500.
Firmer tone within defined ranges"24-HOUR VIEW: Following last Friday’s price action, we highlighted yesterday that “momentum indicators are mostly flat,” and expected EUR to “rangetrade between 1.1415 and 1.1455.” EUR subsequently dipped to 1.1408, rose to 1.1444 before closing largely unchanged at 1.1440 (+0.04%). We continue to expect range-trading, but the firmer underlying tone suggests EUR is likely to trade in a higher range of 1.1425/1.1470."
"1-3 WEEKS VIEW: We revised our EUR view to mildly positive last Friday (03 Jul, spot at 1.1430). We highlighted that “the bias for EUR is tilted to the upside,” but we stated that “expect firm resistance at 1.1470 and 1.1500.” We will maintain this view as long as EUR holds above 1.1390 (‘strong support’ level previously at 1.1370)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Two central banks, two hawkish tones — but only one dollar just took a hit. The ECB delivered a 25bp hike in June, its first since 2023, lifting the deposit rate to 2.25% as Middle East-driven energy costs pushed headline inflation to 3.2% in May before easing to 2.8% in June, with growth downgraded to 0.8% amid weaker confidence.
The Fed, under new Chair Kevin Warsh, held rates at 3.50%-3.75% for a fourth straight meeting, with a hawkish dot-plot shift initially fueling hike expectations. However, the June employment report—released on July 3rd—showed nonfarm payrolls rising by just 57K against 110K expected, the weakest reading in four months, while the unemployment rate dipped to 4.2% only due to a labor force participation rate falling to 61.5%, its lowest level in five years.
The result: both central banks’ communications currently lean hawkish, but with the Fed’s data now sending mixed signals. Which side ultimately prevails could well set the tone for EUR/USD’s trend into year-end.
EUR/USD Technical Analysis
EUR/USD has spent roughly the past year confined within a broad consolidation range, as the chart illustrates, with price repeatedly oscillating between well-defined boundaries and no decisive breakout sustained in either direction.
Bullish Scenario
After briefly breaking below the range’s base support, price snapped back quickly, reclaiming the range almost as fast as it left it. For renewed bullish momentum to take hold, EUR/USD first needs to hold above the 1.1420-1.1460 support zone. The next, more decisive test lies with the descending trendline originating from January’s highs, which has been respected consistently throughout the year. This same area also converges with the 200-period EMA and the long-term ascending trendline broken to the downside in June. This confluence makes 1.1500-1.1550 the pivotal zone: a clean break above it would open the door for the euro to regain sustained strength against the dollar.
Bearish Scenario
The alternative reading is that price is currently only retesting the previously broken key support at 1.1420-1.1460. A decisive break below the low formed near 1.1320-1.1350 would confirm renewed downside momentum, clearing the path to resume the broader medium-term downtrend, where the next significant support comes into play around 1.1100-1.1150.
Either scenario will likely require confluence between technical structure and fundamentals, with central bank rhetoric and action remaining the key driver. ECB or Fed — which one becomes the catalyst for EUR/USD’s next major trend?
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EUR/USD remains slightly under pressure as the US dollar finds mild support ahead of the FOMC minutes Firmer oil prices and volatility in technology stocks reinforce demand for safe-haven dollar German industrial production jumps but fails to offer euro much support The EUR/USD forecast remains tilted slightly to the downside as the dollar continues to attract buyers in what has been a relatively quiet start to the week. With little in the way of fresh economic catalysts, investors are focusing on central bank expectations, oil prices, some volatility in the technology sector and broader risk sentiment. While the euro has managed to hold above the 1.1400 mark, it is struggling to generate meaningful upside momentum as markets increasingly favour the US dollar for now.
Markets settle into wait-and-see mode Currency markets have entered a period of consolidation following last week’s US employment report. Although payroll data was softer than expected, it failed to significantly alter expectations for Federal Reserve policy. Investors appear comfortable maintaining long-dollar positions while waiting for clearer signals from policymakers.
Monday’s US ISM Services PMI came in largely as expected at 54.0, reinforcing the narrative that the US economy continues to expand at a healthy pace without generating fresh inflation surprises. Meanwhile, Fed Governor Christopher Waller largely reiterated familiar views, suggesting inflation risks remain skewed to the upside while questioning whether excessive forward guidance benefits markets.
With today’s US calendar offering few major data releases, attention is already shifting towards Wednesday’s publication of the FOMC meeting minutes. Any indication in the minutes that policymakers were open to the idea of policy tightening in the coming months could keep the dollar supported.
Away from economic data, it is worth keeping an eye on crude oil prices which have extended their recovery for the fourth day, as tensions around the Strait of Hormuz continue to simmer following reports of missile attacks involving commercial vessels. Although energy prices have dropped massively from their conflict-driven highs, lingering supply concerns continue to support crude prices around $70 and, by extension, the defensive appeal of the US dollar.
Euro struggles to find fresh drivers The euro’s outlook is becoming increasingly mixed. Today’s publication of German industrial production figures offered an encouraging surprise, with output rising 0.9% in May, helped by stronger automotive manufacturing and construction activity. The resilience suggests Europe’s industrial sector has so far weathered recent geopolitical disruptions better than many had feared.
However, stronger industrial data alone will not be enough to shift monetary policy expectations decisively. Markets continue to debate whether the European Central Bank will need to tighten policy further later this year, with a September rate increase no longer viewed as the most likely outcome.
That said, ECB officials are unlikely to declare victory over inflation just yet. Core price pressures remain elevated enough to warrant a cautious tone, and speeches from senior policymakers this week could reinforce the message that the inflation battle is not yet complete. While that may offer occasional support to the single currency, it is unlikely to outweigh the broader strength currently underpinning the dollar.
EUR/USD forecast: Technical outlook points to further consolidation From a technical analysis perspective, the EUR/USD forecast is pointing towards continued consolidation. The pair was holding above the 1.1410 support area at the time of writing, but should this region give way then that would expose the 1.1300 area for a potential test.
Source: TradingView.com On the upside, 1.1450-1.1470 remains an important resistance area on EUR/USD. Above that 1.1500 handle is the next level to watch ahead of 1.1575 thereafter.
For now, any meaningful upside in the EUR/USD exchange rate would likely require a clear shift in Fed expectations or a significant deterioration in US economic data, neither of which appears imminent. Thus, markets seem comfortable rewarding the higher US yield advantage while volatility remains subdued.
Overall, the EUR/USD forecast continues to favour modest dollar strength over the near term. Unless the upcoming FOMC minutes deliver an unexpectedly dovish message or ECB officials surprise with a more aggressive stance, the pair may remain confined to the lower end of its recent trading range, with sellers likely to emerge on any short term rallies or recovery attempts.
GBP/USD started a recovery wave and surpassed the 1.3320 resistance. A key contracting triangle is forming with support at 1.3290 on the 4-hour chart. EUR/USD struggled to extend its recovery wave above the 1.1475 resistance. WTI Crude Oil prices are under pressure below the $72.50 pivot level. GBP/USD Technical Analysis The British Pound started a recovery wave above 1.3200 against the US Dollar. GBP/USD gained pace after it settled above 1.3250.
Looking at the 4-hour chart, the pair surged above the 100 simple moving average (red, 4-hour) and 1.3320. However, the bears defended the 1.3385 resistance and the 200 simple moving average (green, 4-hour).
A high was formed at 1.3384, and the pair started consolidating gains. There was a minor decline below 1.3350. If there is another decline, the pair might find support near 1.3290. Besides, there is a key contracting triangle forming with support at 1.3290.
The first major support could be near 1.3250. A downside break and close below 1.3250 might send the pair toward 1.3220. Any more losses could open the doors for a test of 1.3150.
On the upside, the bears might remain active near 1.3385. The next major resistance might be 1.3400. A close above 1.3400 could spark a sharp increase. In the stated case, the bulls could aim for a move to 1.3500.
Looking at EUR/USD, the bulls attempted a recovery wave, but they need a daily close above 1.1475 for upside continuation.
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Key Points:Sticky core inflation and fiscal deficits have reinforced the US Dollar’s strength amid monetary policy divergence.DXY held at $100.93 with green continuation candles retesting Fibonacci 0.618 level.EUR/USD defended $1.1430 blue trendline support with green rejection candles absorbing selling pressure.GBP/USD held $1.3380 resistance zone, testing key levels with mixed candles and neutral momentum.
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Currencies Reflect Divergent Monetary Policies and Economic Fundamentals Dollar, euro and pound rates are still subject to conflicting central bank policies and economic forces as of July 7. On the one hand, the U.S. Federal Reserve’s wait-and-see policy in the face of ongoing core inflation is sustaining dollar rates on the basis of expectations for a relatively tight rate setting in the foreseeable future; on the other hand, there is domestic demand and the status quo for dollars as reserve currency.
A mix of divergent fiscal settings and disparate inflation pressures in various parts of the euro zone and the European Central Bank’s push toward price stability characterize the euro. Policy pass-through in the area remains contingent on a range of national policies, keeping rates sensitive to growth and wage data.
As with other currencies, the Bank of England is considering both services inflation and softness in economic growth, and its policy path is a function of these variables, alongside UK fiscal policy and labor market trends, and relative policy settings for other central banks, which is what largely drives the cross rates with the dollar and euro.
Divergent inflation paths, fiscal settings and growth resilience in the three economies create two-sided risks, with trade and capital flows further driving currency differentiation, as markets seek to discern which central bank will best provide stability and growth.
DXY Holds $100.93 – Fibonacci 0.618 Retest on 1D Dollar Index Price Chart – Source: Tradingview DXY is sitting at $100.93 on the daily time frame. Following a breakout from the $97.67 low, buyers retested the 0.618 Fibonacci retracement zone around $100.31, creating green and red mixed candles. The asset continues to make higher highs, suggesting the upside remains intact above the $100.31 price level and its ascending white trendline.
With RSI hovering around 58, the DXY maintains a neutral-to-bullish bias. The $100.31 zone now serves as a breakout pivot point, per the volume profile, while the next 103 Fibonacci extension sits near $103.09 within the next couple of weeks. The market continues trading in an ascending channel and the higher highs/lows structure keeps the trend bullish.
Trade Idea: Buy at $100.93 with a target of $103.09 and a stop loss under $100.31.
GBP/USD Holds $1.3380 – White Descending Trendline Test on 4h GBP/USD Price Chart – Source: Tradingview GBP/USD is trading at $1.3380 within the 4h timeframe. After getting rejected off the red moving average around $1.337, buyers tested the descending white trendline around $1.3380 and formed green and red mixed candles. The price creates bullish rejection wicks and continues to keep higher highs within the chart. Currently, RSI sits around 67 and is still neutral on the 4h timeframe.
The $1.331 to $1.338 zones are a pivot area, per the volume profile, with the next zone of support around $1.325 to $1.331. GBP/USD still trades in a bullish trend and is still neutral and above its trendline. Higher highs and lows are still in place, and the trendline continues to hold the price higher within the trading range.
Trade Idea: Buy at $1.3380 with a target of $1.345 and a stop loss under $1.325.
EUR/USD Holds $1.1430 – EMA 50 Defense on 4h EUR/USD Price Chart – Source: Tradingview EUR/USD is trading at $1.1430 within the 4h timeframe. After getting rejected off the red moving average around $1.162, buyers retested the 50 EMA around $1.1419 and formed green and red mixed candles. The price creates bullish wicks and continues to keep higher lows within the chart.
Currently, RSI sits around 52 and is still neutral on the 4h timeframe. The $1.140 to $1.150 zones are a pivot area, per the volume profile, with the next zone of resistance around $1.155 to $1.162. EUR/USD still trades in a bullish trend and remains neutral and above its 50 EMA. Higher highs and lows are still in place, and the 50 EMA continues to hold the price higher in the near-term.
Trade Idea: Buy at $1.1430 with a target of $1.155 and a stop loss under $1.140.
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Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.
The EUR/USD pair trades marginally lower at around 1.1433 during the European trading session on Tuesday. The major currency pair faces slight selling pressure as the US Dollar (USD) edges up, while investors await the release of the Federal Open Market Committee (FOMC) minutes of the June policy meeting on Wednesday.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades slightly higher to near 100.92.
Investors keep an eye on the FOMC Minutes to identify reasons probably responsible for restricting policymakers from delivering forward guidance on monetary policy decisions.
In the June monetary policy press conference, Fed Chairman Kevin Warsh said that policymakers agreed that the “so-called forward guidance is not well suited to the current policy conjuncture.
Like the Fed, officials from the European Central Bank (ECB) also appear not in favor of delivering remarks regarding the monetary policy outlook.
Over the weekend, ECB Governing Council member Emmanuel Moulin also denied providing cues regarding the central bank’s decision in July, while speaking at the Rencontres Economiques conference in Aix-en-Provence. “We are not doing forward guidance so I won’t say what we will do in July,” Moulin said.
EUR/USD technical analysis
EUR/USD trades lower at around 1.1430, keeping a bearish near-term tone as the pair holds beneath the 20-day exponential moving average (EMA) at 1.1460. The fact that price remains under this short-term trend gauge suggests rallies are still being capped, while the Relative Strength Index (14) at 41.9 stays below the neutral 50 line, hinting at lingering downside pressure rather than a decisive recovery.
On the topside, immediate resistance is located at the 20-day EMA around 1.1460, and a sustained break above this level would be needed to ease the current bearish bias and open the way for a stronger rebound. Looking up, the pair could advance to the psychological level of 1.1500 if it breaks above the moving average.
On the downside, the yearly low around 1.1330 will be the key support zone; a break below it would expose the pair to the 29 May 2025 low at 1.1210.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Commerzbank’s Volkmar Baur notes EUR/USD has been stuck between 1.1350 and 1.1450 since mid-June, with few catalysts expected over the summer. He highlights that the European Central Bank (ECB) is likely to delay its next rate hike to September and that the Federal Reserve (Fed) is also unlikely to deliver clear signals, which should limit US Dollar (USD) strength and gradually support the Euro (EUR) into next year.
Rangebound pair awaits autumn drivers"Since mid-June, EUR/USD has been fluctuating between 1.1350 and 1.1450, and one is slowly getting the feeling that this could continue for a while longer."
"It therefore seems probable that the ECB will leave the key interest rate unchanged, while at the same time making it clear that another rate hike is possible but not yet certain."
"As for the Fed, the market is currently still pricing in slightly more than one rate hike by year-end. In September, Kevin Warsh will have to say a bit more than just “task force” when asked about the economic situation. We continue to expect that he will not raise interest rates - a development that is likely to weigh on the dollar."
"And the closer we get to next year, the stronger the support for the euro is likely to become. Yesterday’s German industrial orders data showed that a cyclical recovery is slowly taking shape. Structural reforms and expansionary fiscal policy should also help Germany and Europe grow faster next year."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The Pound to Dollar (GBP/USD) exchange rate traded in a narrow range on Monday as easing UK political uncertainty offset renewed demand for the US Dollar following last week's sharp selloff.
At the time of writing, GBP/USD was trading at $1.3352, little changed on the day.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.335559 (+0.03%)
Euro to Dollar (EUR/USD): 1.141696 (-0.17%)
Dollar to Yen (USD/JPY): 162.33951 (+0.61%)
DAILY RECAP:
The US Dollar attracted support on Monday as US markets reopened following the long Independence Day weekend.
The ‘Greenback’ seemed to have entered oversold conditions following its sharp losses in the wake of last week’s non-farm payrolls report, which reported an unexpectedly large slowdown in job creation.
Therefore, some price-conscious investors were willing to buy the dip, lifting the US Dollar.
Meanwhile, the latest ISM services PMI printed in line with expectations, easing from 54.5 in May to 54 in June. Although this was a slight softening of activity, it still represented a healthy expansion in the US services sector.
Meanwhile, the Pound (GBP) held strong on Monday as investors continued to scale back the political risk premium that has weighed on Sterling in recent weeks.
With MP Andy Burnham widely expected to become the next Prime Minister, markets appear increasingly confident that the UK will avoid a lengthy and disruptive Labour leadership contest.
Burnham has moved to reassure investors since launching his leadership bid, pledging to maintain the government’s existing fiscal rules while also outlining ambitious plans to support the economy.
This has been well received by GBP investors, with Sterling finding support as concerns over UK political instability continue to recede.
Near-Term GBP/USD Forecast: US Employment Data to Support the Dollar? Looking forward, high-impact data is thin on the ground on Tuesday, with the US weekly ADP employment change figure being the only release of note. This mid-tier data could support the US Dollar, if it reports healthy growth in US private employment.
Elsewhere, market risk appetite could influence the pairing. The safe-haven US Dollar would likely benefit if the market mood sours, while the increasingly risk-sensitive Pound could attract support if sentiment brightens. Any shifts in risk appetite could see GBP/USD waver.
