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Summary:

EUR/USD has slipped as renewed US-Iran tensions strengthened safe-haven demand for the US dollar and pushed Treasury yields higher. A break below 1.1370 could expose the pair to 1.1350 and 1.1300, while recovery attempts remain capped near the 1.1475 to 1.1500 area. US inflation data is the next major catalyst, with a hotter CPI reading likely to reinforce dollar strength and increase pressure on the euro. EUR/USD came under renewed selling pressure on Monday as fresh military exchanges between the United States and Iran revived demand for the US dollar and lifted global energy prices.

The pair struggled to build on last week’s recovery and moved back toward the lower end of its recent range as investors prepared for the latest US Consumer Price Index report. Higher crude oil prices have added to inflation concerns, pushing US Treasury yields higher and strengthening expectations that the Federal Reserve may keep interest rates restrictive for longer.

The Dollar Index has recovered toward the 101.00 area after ending the previous week lower. For EUR/USD, the stronger greenback has brought the 1.1370 support level back into focus, with traders assessing whether the pair can stabilize or extend its decline toward 1.1350 and 1.1300.

Why Is EUR/USD Falling Today? The latest weakness in EUR/USD reflects a combination of geopolitical risk, higher oil prices and rising US bond yields.

Fresh attacks between the US and Iran over the weekend raised concerns about the future of shipping through the Strait of Hormuz. Iran said the key waterway had been closed again, while Washington maintained that commercial traffic could continue.

The conflicting claims sent crude oil prices sharply higher and revived concerns that another energy shock could keep global inflation elevated.

Higher oil prices tend to support the US dollar during periods of market stress. They can also place additional pressure on the euro because the Eurozone relies heavily on imported energy, leaving the region more exposed to rising fuel costs.

US CPI Could Decide the Dollar’s Next Move The US inflation report is likely to become the most important driver for EUR/USD in the near term.

A stronger-than-expected CPI reading would reinforce expectations that the Federal Reserve may need to maintain higher interest rates or consider additional tightening later this year. That outcome would likely push Treasury yields and the dollar higher, increasing the risk of EUR/USD falling through its current support zone.

A softer inflation report would create a different setup. It could reduce pressure on the Fed to tighten policy further and allow EUR/USD to recover some of its recent losses.

However, the impact of softer inflation could be limited if oil prices continue rising or geopolitical tensions worsen.

Euro Recovery Struggles Near 1.1500 EUR/USD recently recovered from lows around 1.1325 and moved above 1.1420, but the advance stalled before the pair could establish a sustained move through the 1.1475 to 1.1500 region.

That failure suggests sellers remain active whenever the euro approaches higher levels.

The pair now faces an important test around 1.1370. A clear move below that level would increase the likelihood of a decline toward 1.1350, followed by the June low near 1.1325. If selling pressure persists, the psychological 1.1300 level could become the next target.

On the upside, EUR/USD would need to recover above 1.1450 before challenging 1.1475 and 1.1500 again. A sustained break through 1.1500 would weaken the immediate bearish outlook and could support a broader recovery toward 1.1580.

ECB and Fed Policy Expectations Remain Divided Interest-rate expectations on both sides of the Atlantic continue to shape the EUR/USD outlook.

The Federal Reserve remains focused on inflation after stronger energy prices complicated the outlook for consumer prices. Recent weakness in US employment reduced expectations of immediate tightening, but the latest geopolitical escalation has prevented markets from fully dismissing the possibility of another rate increase.

In Europe, softer core inflation has reduced expectations of further European Central Bank tightening. That leaves the euro with less policy support, particularly if US inflation remains elevated and Treasury yields continue climbing.

Comments from Federal Reserve and ECB officials will therefore remain important as traders look for any change in the policy outlook.

EUR/USD Outlook The near-term EUR/USD price forecast remains cautious as the pair struggles to hold its recent recovery.

The US dollar is benefiting from safe-haven demand, rising oil prices and higher Treasury yields, while the euro faces renewed pressure from Europe’s exposure to imported energy costs.

A break below 1.1370 would put 1.1350 and 1.1300 within reach. However, softer US inflation or an easing of Middle East tensions could weaken the dollar and help EUR/USD return toward 1.1450 and 1.1500.

For now, US CPI and developments surrounding the Strait of Hormuz are likely to determine whether the pair stabilizes or begins another leg lower.

Why is EUR/USD falling today?

EUR/USD is falling as renewed US-Iran tensions increase safe-haven demand for the US dollar. Rising oil prices and Treasury yields have also strengthened expectations that US interest rates may remain elevated.

What are the key EUR/USD levels to watch?

The main support levels are 1.1370, 1.1350 and 1.1300. Resistance is located near 1.1450, followed by 1.1475 and 1.1500.

How could US CPI affect EUR/USD?

A hotter US CPI reading could strengthen the dollar and push EUR/USD lower by increasing expectations of tighter Federal Reserve policy. Softer inflation could weaken the greenback and support a euro recovery.

The Euro to Dollar (EUR/USD) exchange rate has slipped back towards 1.1415 as investors continue to favour the US Dollar following resilient US economic data and expectations that the Federal Reserve will keep interest rates higher for longer.

HSBC believes EUR/USD is likely to face renewed downside pressure as markets shift their focus back to interest-rate differentials.

The bank notes that geopolitical concerns in the Middle East have eased, reducing one source of support for the Dollar. However, it argues that renewed disruption to shipping routes could quickly restore safe-haven demand for the US currency.

According to HSBC, firm US labour market conditions and sticky inflation continue to justify a cautious approach from the Federal Reserve, keeping longer-term yield support firmly behind the Dollar.

The bank also highlights that Eurozone inflation has cooled, but underlying price pressures remain elevated, leaving the European Central Bank in a difficult position.

HSBC argues that "the EUR loses out on fundamentals", with interest-rate differentials now re-emerging as the dominant driver of EUR/USD.

The bank adds that the outlook could deteriorate further if energy prices rise again, warning that renewed disruption in the Middle East would increase stagflation risks for the Eurozone and add fresh pressure on the single currency.

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).

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.)