Dollar Index Price Chart – Source: Tradingview The Dollar Index has developed the bearish Shark harmonic pattern, and a breakdown below the long-term ascending trendline and both the 50-EMA (100.98) and the 100-EMA (100.99) has occurred. The impulse has been strongly bearish, and the RSI has declined to the low thirties and in the vicinity of the oversold region. With the trendline broken, the outlook remains bearish despite the potential for a counter trend rally.
To the downside, the first key support is at 99.86, with 99.40 following. The downside resistance is at 100.40, and 100.99 and 101.47 offer the most significant resistance. Until the trendline and moving averages are retaken, any rise will meet selling pressure.
The outlook remains bearish as long as DXY is below 100.99, and the recent breakdown has increased selling pressure to 99.86.
The EUR/USD pair trades in negative territory around 1.1500 during the early European trading hours on Friday. The Euro (EUR) softens against the US Dollar (USD) as escalating tensions in the Middle East weigh on riskier assets.
Iranian Parliament Speaker Mohammad Bagher Ghalibaf said on Thursday that the United States (US) will pay the price for killing Iranian civilians, per the Guardian. The Islamic Revolutionary Guard Corps (IRGC) said on Thursday that it targeted US bases in Kuwait, Jordan and Bahrain after US forces bombed a building on Iran’s Qeshm Island. The Iranian military added that the Strait of Hormuz would remain closed and that the “aggressor will be punished.”
Stronger-than-expected Gross Domestic Product (GDP) data from the Eurozone and Germany have reinforced expectations that the European Central Bank (ECB) could deliver a second interest rate hike this year, potentially as soon as September. This, in turn, might help limit the shared currency’s losses in the near term.
Eurozone recovery underpins expectations for September ECB hikeBrown Brothers Harriman’s Elias Haddad underscores that the recent improvement in Eurozone data is strengthening the policy case for further tightening. He notes that “the recovery in Eurozone economic activity and above target inflation reinforces the case for the ECB to resume raising rates in September,” suggesting that the combination of firmer growth and persistent price pressures keeps the central bank on track for another move after its current pause.
Technical Analysis: EUR/USD maintains negative outlook under 100-day SMAIn the daily chart, EUR/USD remains capped in the near term, as spot holds below the 100-day simple moving average (SMA) and presses against the upper Bollinger Band, suggesting upside attempts are meeting supply. The Bollinger midline underpins the structure, while the Relative Strength Index (RSI) at about 59 hints at improving but not yet overbought momentum within an overall constrained backdrop.
On the topside, immediate resistance is aligned at the upper Bollinger Band around 1.1510, with the 100-day SMA at 1.1570 acting as the next significant barrier that bulls would need to reclaim to ease the broader bearish cap.
On the downside, initial support is seen at the daily mid-Bollinger band near 1.1425, ahead of the lower Bollinger Band around 1.1340, where a break would likely reinforce downside pressure and reopen the path toward lower lows.
(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.
Personal Spending increased by +0.3% month-over-month in June, in line with analyst estimates. Personal Income grew by +0.2%, compared to analyst consensus of +0.3%.
PCE Price index declined from 4.1% in May to 3.7% in June, meeting analyst expectations.
Traders also had a chance to take a look at the Initial Jobless Claims report. The report showed that 197,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 200,000.
Currently, U.S. Dollar Index is trying to settle below the support at 99.85 – 100.00. In case this attempt is successful, U.S. Dollar Index will head towards the next support level at 99.25 – 99.40. It should be noted that RSI is in the oversold territory, so the risks of a rebound are increasing.
EUR/USD Tests New Highs As Euro Area GDP Growth Rate Beats Estimates
EUR/USD’s break of 1.1499 support turned resistance argue that fall from 1.2081 might have completed as a three wave correction at 1.1323. Intraday bias is back on the upside for 1.1621 cluster resistance (38.2% retracement of 1.2081 to 1.1323 at 1.1613). Decisive break there will add more credence to this bullish case, and target 61.8% retracement at 1.1791. Nevertheless, break of 1.1433 minor support will turn bias back to the downside, for 1.1323/1352 support zone instead.
In the bigger picture, focus is back on 38.2% retracement of 1.0176 to 1.2081 at 1.1353. Decisive break there will revive the case of medium term bearish trend reversal after rejection by 1.2 key cluster resistance level. Further fall should be seen to 61.8% retracement at 1.0904. Nevertheless, strong rebound from 1.1353, followed by break of 1.1621 resistance, will retain medium term bullishness.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
TL;DR: EUR/USD’s rebound reflects broad-based Euro strength as oil’s rebound since mid-week pushes markets toward the ECB’s own hawkish scenario, lifting September hike odds to roughly 70%.
Euro’s Broad-Based Strength Tells a Bigger Story EUR/USD has staged a notable rebound in the last 24 hours, but attributing the move solely to Dollar weakness misses a broader shift taking place in currency markets. The Dollar has indeed softened after investors pared expectations for a September Fed rate hike. Yet the Euro has strengthened not only against the Dollar, but against most major peers. That broad-based performance suggests investors are repricing the European Central Bank itself, rather than merely rotating away from weaker currencies.
Oil Is Moving the ECB’s Reaction Function in a Hawkish Direction The catalyst isn’t that the ECB has changed its policy stance, but that the assumptions feeding its reaction function have shifted. In its March staff projections, the ECB outlined a baseline scenario built around Brent crude averaging around $90 and European natural gas around €57/MWh through 2026, while an adverse scenario assumed oil near $120 and gas around €102/MWh — resulting in materially higher inflation.
That framework has become relevant again. At the ECB’s July 23 press conference, held as Brent broke above $100, President Christine Lagarde remarked that the earlier US-Iran ceasefire had been “short-lived,” leading to “serious developments on commodity markets.” She also stressed the ECB’s reaction function was “very well understood” by markets and projected inflation to remain well above target into the first half of 2027. This week’s renewed attacks involving Iran, US forces, and Saudi energy infrastructure have reversed much of the earlier decline in oil prices, pushing markets back toward the ECB’s own baseline energy scenario.
Oil Doesn’t Trigger Hikes Automatically Importantly, the ECB hasn’t become mechanically more hawkish simply because oil prices have risen. Lagarde has repeatedly emphasized that policymakers ultimately look for second-round effects — particularly stronger wage growth, firmer services inflation, and higher inflation expectations — before concluding inflation is becoming entrenched.
However, higher oil prices still matter because they shift the starting point. A sustained rise in energy costs lifts the projected path for headline inflation, making it easier for the Governing Council to conclude another rate hike is warranted. In effect, stronger oil prices lower the evidentiary burden for tightening even if second-round effects have yet to fully emerge, because the ECB’s own scenario analysis already treats prolonged energy shocks as sufficient to generate materially higher inflation.
GDP Removes One of the Dovish Arguments Today’s stronger-than-expected GDP data reinforce that assessment. Eurozone GDP expanded 0.4% qoq in the second quarter, beating expectations and rebounding from the flat first quarter. While hardly signaling an economic boom, the figures weaken one of the main dovish arguments — that growth is too fragile to absorb another rate increase. With activity proving more resilient than expected, the ECB has greater room to tighten policy without immediately risking recession.
Markets and Banks Are Converging on a September Hike That combination has fed directly into market pricing. Investors now assign roughly a 70% probability to a September rate hike, with much of this week’s repricing driven by renewed oil strength outweighing the more dovish tone that emerged from the ECB’s Sintra forum earlier this month.
Several major banks have moved in the same direction:
Deutsche Bank now describes a September increase to 2.50% as “highly likely” and close to a “done deal.” UOB expects one final 25 basis point hike followed by an extended pause. ING notes that around 23 basis points are already priced and argues the ECB has historically preferred to fully telegraph its policy moves. What to Watch Next Attention now turns to whether the oil rally proves durable. If tensions involving Iran continue to support energy prices into September, the ECB’s adverse inflation scenario will become increasingly relevant. Conversely, a renewed de-escalation could quickly reduce the urgency for another hike. Investors will also closely monitor upcoming remarks from ECB officials to see whether the stronger GDP data strengthens confidence that another move is becoming appropriate.
ActionForex’s Technical View on EUR/USD Technically, EUR/USD has improved but has yet to confirm a bullish reversal. The pair remains capped below 1.1499, which has switched from support to resistance. Encouraging signs are nevertheless emerging: the 4H MACD continues to strengthen, price has broken its near-term falling trend line, and the daily MACD continues to display bullish divergence. The pair is also finding support around the 38.2% retracement of 1.0176 to 1.2081, at 1.1353.
A decisive break above 1.1499, followed by sustained trading above the 55-day EMA at 1.1484, would strengthen the case that the decline from 1.2081 completed as a three-wave correction at 1.1323, opening the way toward 1.1848 and potentially higher.
Nevertheless, failure to overcome 1.1499 would keep the broader decline intact and leave scope for a deeper fall toward the 100% projection of 1.2081 to 1.1408 from 1.1848 at 1.1175.
Key Takeaways EUR/USD’s rebound reflects broad Euro strength against most major peers, not just Dollar weakness from fading Fed hike bets. Oil’s return above $100 is pushing markets toward the ECB’s own adverse inflation scenario, lowering the bar for another hike without requiring new second-round effects. Stronger-than-expected Q2 Eurozone GDP (0.4% qoq) removes the argument that growth is too fragile to absorb another rate increase. Markets now price roughly a 70% probability of a September ECB hike, with Deutsche Bank, UOB, and ING all leaning toward a move to 2.50%. EUR/USD needs a decisive break above 1.1499 and the 55-day EMA at 1.1484 to confirm the decline from 1.2081 has completed as a corrective structure.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
Chris Turner at ING writes that EUR/USD bounced modestly after the FOMC but was constrained by higher long-dated US yields and pressure on US growth stocks. ING expects the Federal Reserve (Fed) to stay on hold in September, projecting EUR/USD near 1.17 by end-Q3, while in the near term the pair is seen trading in a 1.14–1.15 range, guided by Eurozone GDP and inflation data.
Fed hold view supports Euro outlook"EUR/USD enjoyed a modest bounce after the Fed press conference, but probably got caught in the crosscurrents."
"The drop in short-dated US real yields was a clear EUR/USD positive, but the sell-off in long-dated US rates and the pressure it put on growth stocks in the S&P 500 probably capped the EUR/USD move. Ultimately, the ING house call is that the Fed does not hike in September and EUR/USD ends the third quarter near 1.17."
"But high energy prices and a strong US economy make that Fed decision in September a very close call. Over the shorter term, we expect EUR/USD probably to trade out a 1.14-1.15 range and take its cue from the data."
"Europe today will see its first look at second quarter GDP prints and also indications of July inflation. Weak growth (the eurozone is expected at 0.2% quarter-on-quarter) probably will not stand in the way of an ECB hike in September, which is more than 90% priced. An uptick in July inflation data today and high oil prices should keep short-dated euro rates supported."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Commerzbank’s FX Research team, including Charlie Lay and colleagues, notes that the Dollar Index fell and EUR/USD climbed after the Federal Reserve left rates unchanged but revealed a significant internal split. The softer Dollar tone, combined with market pricing for a possible September hike and higher long-end US yields, helped EUR/USD extend gains, reflecting shifting expectations for US monetary policy.
Euro benefits from softer Dollar"The main theme overnight was the Fed's surprisingly divided decision to leave interest rates unchanged. The FOMC kept the target range unchanged at 3.50-3.75% for the seventh consecutive meeting, but three officials dissented in favour of a 25bp hike, highlighting a growing concern over persistent inflation."
"Markets interpreted the decision as less hawkish than the dissents suggested, pushing the US 2Y Treasury yield and the USD lower. However, longer-dated yields rose sharply as investors judged the Fed's response insufficient to contain persistent inflation."
"The Fed funds futures are pricing in 63% probability of a 25bp hike in September. They have pared back the total hike for this year to 33bp compared to 42bp on Tuesday."
"For today, we get personal income, personal spending, PCE inflation, initial jobless claims, and the advance estimate for Q2 GDP. The market consensus is at 2% qoq annualized vs 2.1% in Q1. The Atlanta Fed GDPNow forecast is at 1.6% as of 27 July 2026."
"The Dollar Index fell 0.5% to 100.89 and EUR/USD gained 80 pips to 1.1470."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The Euro (EUR) trades marginally lower to near 1.1455 against the US Dollar (USD) during the early European trading session on Thursday. The major currency pair corrects slightly after a strong recovery move in the last two trading days, with investors awaiting the German flash Harmonized Index of Consumer Prices (HICP) data for July.
According to estimates, the German headline HICP rises at a stronger pace of 2.8% Year-on-Year (YoY) against the previous reading of 2.4%. On a monthly basis, the headline HICP grows by 0.8% after declining by 0.2% in June.
Signs of hot inflationary pressures would boost European Central Bank (ECB) interest rate hike expectations. During the day, investors will also focus on the preliminary German and Eurozone Q2 Gross Domestic Product (GDP) data.
On Wednesday, the major currency pair gained strongly after the Federal Reserve’s (Fed) monetary policy announcement, in which it left interest rates steady in the range of 3.50%-3.75% for the fifth time in a row. Fed officials warned of upside inflation risks, and said that they are committed to bring it down.
EUR/USD technical analysis
EUR/USD trades marginally lower at around 1.1455 at press time. However, the near-term bias of the pair has improved as it looks sustainable above the 20-period exponential moving average (EMA), which is at 1.1422.
There is a Double Bottom formation on the daily chart, which reflects the arrival of bulls in the counter after a long period. Bullish hopes for the pair would strengthen once it decisively breaks above the marked hurdle at 1.1483.
The Relative Strength Index (14) shifts into the 40.00-60.00 range from the 20.00-40.00 zone, which indicates that the downside momentum has cooled off.
On the downside, immediate support is seen at the 20-period EMA at 1.1422, followed by the July 28 low at 1.1353. On the topside, the pair could extend the advance towards the June 12 low at 1.1557 once it crosses above the 1.1483 hurdle decisively.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator Harmonized Index of Consumer Prices (YoY) The Harmonized Index of Consumer Prices (HICP), released by the German statistics office Destatis on a monthly basis, is an index of inflation based on a statistical methodology that has been harmonized across all European Union (EU) member states to facilitate comparisons. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is bullish for the Euro (EUR), while a low reading is bearish.
Fed-driven breakout confronts resistance near 1.1480 Relative growth likely to determine EUR/USD's next directional move US consumer spending data may prove more important than core PCE Middle East tensions complicate EUR/USD breakout above resistance EUR/USD jumped on Wednesday after the Federal Reserve left interest rates unchanged, prompting traders to unwind the tightening that had been priced into the front end of the US rates curve ahead of the decision. The resulting decline helped the pair break above the minor downtrend it had been trading beneath since the middle of July.
However, before traders consider chasing the move, seeking a breakout of the broader sideways range EUR/USD has been stuck in for the past six weeks, it's worth asking whether there has really been a meaningful shift in the macro backdrop. With geopolitical tensions escalating once again, energy prices surging and month-end flows potentially distorting price action, there are plenty of reasons to question whether Wednesday's move tells the full story.
Front-end repricing lifts EUR/USD
Source: TradingView
The correlation matrix above does a good job explaining why EUR/USD rallied following the Fed decision. Ahead of the meeting, overnight index swaps had priced around nine basis points of tightening into the front end of the US rates curve, implying roughly a one-in-three chance of a 25 basis point rate hike. When that failed to eventuate, traders unwound those expectations, sending front-end Treasury yields sharply lower. Given the close relationship between EUR/USD and front-end US rate pricing over the past month, the euro's rally was exactly what market mechanics would have suggested.
Source: TradingView
The bigger question is whether that move has much further to run. Despite the Fed opting to keep policy unchanged, overnight index swaps continue to price around 50 basis points of tightening by the June meeting next year. That suggests markets still believe the Committee will ultimately have to do more if it is to restore price stability.
For now, Kevin Warsh is still getting the benefit of the doubt from traders. His preference is clearly to let markets do much of the heavy lifting by adjusting broader financial conditions in response to incoming data rather than explicit forward guidance. As things stand, markets are doing exactly that, continuing to price a meaningful amount of additional tightening.
But that approach has a finite lifespan. If markets eventually move to fully price another rate hike, or more, and the Fed again declines to deliver, strategic uncertainty will start looking less like a deliberate policy tool and more like reluctance to adjust policy settings.
Source: TradingView
If that were to take place, it would be terminal for the US dollar as traders rightfully question the Fed's inflation-fighting credentials. But for now, with meaningful tightening priced into the curve, it questions how long the current bout of US dollar weakness can be sustained.
Relative growth comes into focus Attention now shifts to a heavy run of economic data from both sides of the Atlantic. While Germany's inflation report will attract attention ahead of tomorrow's euro area CPI release, today's bigger story for EUR/USD is likely to be growth.
Source: TradingView
Markets expect the euro area economy to have expanded by 0.2% in the June quarter, which, barring revisions, would lift annual growth to 0.5%. In the United States, GDP is forecast to increase at a seasonally adjusted annualised rate of 2.1%, matching the pace seen in the first quarter. While the preliminary US GDP report relies on several assumptions and is subject to revision, history suggests it can still be a notable market mover.
While June core PCE inflation, the Federal Reserve's preferred inflation measure, will also be released during today's session, it rarely surprises nowadays given economists can forecast it with a high degree of confidence using the CPI and PPI reports released earlier in the month. As such, greater attention is likely to fall on the personal income and spending data, providing fresh evidence on whether the resilience in US consumer spending can continue. With households continuing to underpin economic growth, any signs income growth is slowing or the savings rate is falling further would raise questions about how much longer consumers can continue carrying the economy.
Ultimately, for EUR/USD, it's the relative growth picture that matters. Any meaningful deviation from expectations on either side of the Atlantic has the potential to shift interest rate expectations and, by extension, the direction of the pair.
Until those releases arrive, the technical picture provides the clearest guide to the levels worth watching.
Bulls confront the next hurdle
Source: TradingView
More broadly, EUR/USD has been rangebound since the middle of June, capped by resistance around 1.1480, with bids repeatedly emerging around 1.1364 and the 38.2% Fibonacci retracement of the January 2025 to January 2026 bull move at 1.1355. Sellers tested that support zone earlier this week but failed, paving the way for the pair to break above the minor downtrend that had capped rallies since the middle of July.
EUR/USD now sits back near the top of that broader range. Resistance around 1.1480 is reinforced by the 50-day simple moving average sitting just above. Should price break convincingly through both, 1.1500 is the next level to watch. Beyond that, attention shifts to the longer-term downtrend, currently found just above 1.1550, with the 100-day simple moving average also located nearby. That creates what looks like a formidable resistance zone, especially if geopolitical tensions in the Middle East remain elevated.
On the downside, having broken above the July downtrend, the former resistance line becomes initial support. It sits around 1.1400 today. Below that, attention shifts back to the top of the broader support zone at 1.1364, followed by the late June swing low of 1.1325.
Momentum indicators offer little conviction either way. RSI (14) has pushed back above the neutral 50 level but sits at only 55, while MACD has crossed above the signal line but remains negative. Taken together, they point to neutral rather than directional momentum.
Beyond technicals, my gut feel is that EUR/USD may struggle to deliver a sustained break above 1.1480 unless we see a meaningful improvement in the geopolitical backdrop or today's data materially weaken the US dollar.
US Dollar Talking Points: Markets were pricing in approximately a one in three chance for a rate hike today, which did not end up happening. Despite FOMC Chair Kevin Warsh sounding hawkish by repeatedly saying that inflation must come down, the bank made no move to do so at today’s rate decision and, instead, we’re seeing many of the trades aligned with rate cuts coming off quickly. Keep in mind that the larger reaction to a meeting of this nature will often take days to play out, as what we’re seeing now is the initial reaction from rate hike bets and hedges in anticipation of such coming off.
The June rate decision prodded a rally in the Dollar and in response, markets were highly expecting the possibility of a rate hike at today’s July rate decision from the FOMC. As Kevin Warsh has said numerous times, inflation is, and has remained well above the Fed’s 2% target. This was even the case during rate cut campaigns in 2024 and 2025, with Core CPI never dipping below 2% through that time. To be sure, the Fed made other arguments as to why the rate moderation was necessary and we saw a likely reason for that back in March of 2023 as higher rates were starting to cause stress with regional banks in the US.
What the Fed says and what they do, however, aren’t always the same thing, and given how important FOMC messaging has become and how it was a vital tool in the bank’s management of the economy in the post-GFC backdrop, it makes sense as to why they might try to alter matters here.
But – the backdrop that Kevin Warsh is looking for may be a more volatile one, as the forward guidance and preparation for whatever move the Fed was looking to make taught market participants to rest easily on the leanings of the bank. And now they have to fend for themselves based on the incoming data.
As such there was a legitimate build of expectation for a rate hike today, despite the fact that inflation has actually eased of late. If there was an actual hike, I think the repercussions would be massive, as President Trump spent months during the nomination process teasing rate cuts, even going as far as to say a willingness to cut rates was a ‘litmus test’ for whomever he ultimately selected. If Kevin Warsh presided over a rate hike in only his second meeting at the bank, the response from President Trump’s social media accounts would likely be one for the ages, but that’s not a scenario that we need to entertain at this point as markets are even going so far as to price out a possible move in September.
In the US Dollar, I went over this in-depth in yesterday’s webinar. The currency has since broken down on the back of those rate hike bets getting priced out. I have this currently at the bottom of the ‘s2’ support zone and the next big item here is probably something to do with Japan ahead of the BoJ rate meeting, which I’ll touch on in a moment.
US Dollar Four-Hour Price Chart Chart prepared by James Stanley; data derived from Tradingview EUR/USD In the webinar yesterday I looked at a falling wedge formation in EUR/USD that opened the door for a pullback. That move is now in place and price has pushed up to the next resistance level, at 1.1469. The big spot overhead is the 1.1500 handle but at this point, I think a topside break above that would probably need a larger move down in USD/JPY as the big picture carry trade still remains a crowded venue.
If the BoJ can successfully frighten markets into thinking they may be taking a more-hawkish turn, there could be excuse for longs to bail and, in turn, stops can get hit to lead to more downside pressure. I think that would be more likely than an intervention threat at this point just given price trajectory, but with the BoJ coming up that can change quickly but suffice to say, I think that EUR/USD could possibly be taking directional pushes from the carry trade in USD/JPY.
EUR/USD Four-Hour Chart Chart prepared by James Stanley; data derived from Tradingview USD/JPY This is the big one and we’ve seen just how impactful moves in USD/JPY can be across the Dollar spectrum. It was just a little over two years ago when an intervention on the morning of a US CPI print sent both USD/JPY and DXY spiraling lower, and it carried US equities down with it.
At this point, I don’t think that Japanese policymakers necessarily mind the spot rate being above the 160 handle but the primary fear is one of losing control to where the currency slides to such a degree that inflation becomes problematic, which would then force their hand and in turn endanger growth. When you’re looking at a population conundrum like Japan is, that’s dangerous, as stalling that growth could become a generational issue so, I think if given the option the Bank of Japan would prefer for spot rates to stay around where they are now.
In USD/JPY, we now have a pullback after the FOMC meeting and price is currently holding at support, the same looked at in yesterday’s webinar.
As long as the fundamental divergence remains in place, and Warsh did nothing to question that today by retaining that hawkish-sounding outlook, there’s a case for bulls to come in to defend support.
That said, this is a crowded trade so if there was a shock of counter-trend stimuli getting priced-in, such a more-hawkish BoJ, that could run some stops and lead to short-term supply. That could then re-open the door for bulls on a bigger picture basis, but the point is the price always at least somewhat efficient given the known facts so there’s really no free lunch here, there’s always risk in the equation.
USD/JPY Four-Hour Price Chart Chart prepared by James Stanley; data derived from Tradingview --- written by James Stanley, Senior Market Analyst, Global Macro
Key Points:EUR/USD pulled back as traders focused on the strong rally in the oil markets. GBP/USD moved lower as traders prepared for Fed decision. USD/JPY remained stuck near the 164.00 level.
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U.S. Dollar Moves Higher As Traders Wait For Fed Interest Rate Decision
DXY 290726 4h Chart U.S. Dollar Index gains ground as traders prepare for Fed Interest Rate Decision, which will be released soon.
Analysts expect that Fed will leave the federal funds rate unchanged. Interestingly, FedWatch Tool indicates that there is a 33.7% chance for a rate hike. As usual, forex traders are cautious ahead of the key event of the week.
U.S. Dollar Index failed to settle below the support level at 101.15 – 101.30 and rebounded towards the 101.50 level. In case U.S. Dollar Index manages to settle above 101.50, it will head towards the nearest resistance level, which is located in the 101.80 – 101.95 range.
EUR/USD Pulls Back Amid Rally In The Oil Markets EUR/USD 290726 4h Chart EUR/USD is losing ground as traders react to the strong rally in the oil markets. Oil prices are up by more than 7% as Iran attacked a U.S. base in Jordan. High oil prices will put additional pressure on the European economy and may force the Fed to be more hawkish, which is bearish for the European currency.
The nearest support level for EUR/USD is located in the 1.1350 – 1.1365 range. A successful test of this level will push EUR/USD towards the next support at 1.1285 – 1.1300. RSI is in the moderate territory, so there is plenty of room to gain additional momentum in case the right catalysts emerge.
GBP/USD Retreats Ahead Of Fed Decision GBP/USD 290726 4h Chart GBP/USD is moving lower as traders wait for Fed decision and focus on the rally in the oil markets. Traders are not ready for big moves ahead of Fed’s announcement.
In case GBP/USD settles below the 1.3280 level, it will head towards the support at 1.3250 – 1.3265. A move below the 1.3250 level will push GBP/USD towards the next support level at 1.3170 – 1.3185.
USD/CAD 290726 4h Chart USD/CAD is losing some ground despite the pullback in precious metals. Other commodity-related currencies have found themselves under pressure in today’s trading session.
If USD/CAD declines below the 50 MA at 1.4081, it will head towards the nearest support level, which is located in the 1.4010 – 1.4025 range. On the upside, a move above the resistance level at 1.4125 – 1.4140 will open the way to the test of the next resistance at 1.4235 – 1.4250.
USD/JPY Looks Ready To Test The 164.00 Level USD/JPY 290726 4h Chart USD/JPY continues its attempts to settle above the key resistance level as traders react to rising Treasury yields. The yield of 2-year Treasuries climbed above the 4.33% level, while the yield of 10-year Treasuries settled near 4.65%. Traders should note that USD/JPY will be extremely sensitive to Fed decision and comments from Fed Chair Warsh.
In case USD/JPY manages to settle above the 164.00 level, it will gain additional upside momentum and head towards the 165.00 level. USD/JPY has not tested the 165.00 level since 1986. It remains to be seen whether Bank of Japan would try to defend the yen as the Japanese currency is fundamentally weak and any attempts to break the current trend may waste reserves.
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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.
Euro Technical Outlook: EUR/USD Short-term Trade Levels EUR/USD has tested both ends of the monthly range, leaving the pair at a pivotal technical inflection point. The weekly and monthly opening ranges remain intact just above critical support- breakout pending. A topside breach would weaken the multi-month downtrend, while a loss of support would favor another leg lower. The FOMC decision, Core PCE inflation, and Eurozone CPI could provide the catalyst for the next major move. Resistance 1.1422, 1.1483/92 (key), 1.1576/78- Support 1.1355/60 (key), 1.1276, 1.1214 EUR/USD enters the final days of the month with both sides of its monthly range now tested, leaving the pair at a pivotal technical crossroads ahead of today's FOMC rate decision. The broader downtrend remains intact, but the weekly and monthly opening ranges continue to hold just above critical support as traders await a decisive catalyst. With the Fed and key US / Eurozone inflation data on tap into the monthly close, the next breakout could provide important directional guidance heading into August trade. Battle lines drawn on the Euro short-term technical charts.
Review my latest Weekly Strategy Webinar for an in-depth breakdown of this EUR/USD technical setup and more. Join live Monday’s at 8:30am EST.
Euro Price Chart – EUR/USD Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
Technical Outlook: In my last Euro Short-term Technical Outlook we noted that EUR/USD was trading within a well-defined monthly opening range, just above support and that, “From a trading standpoint, rallies would need to be limited to 1.1492 IF price is heading lower on this stretch with a close below 1.1355 needed to fuel the next leg of the decline.” Euro rallied in the following days with price registering an intraday high at 1.1483 before reversing. The decline extended more than 1.1% off the highs with price registering an intraday low yesterday at 1.1353. Both sides of the range have now been tested, and the focus is on a breakout into the close of the week / month with the FOMC rate decision on tap later today.
Euro Price Chart – EUR/USD 240min
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
Notes: A closer look at Euro price action shows EUR/USD continuing to trade within the confines of the descending pitchfork we have been tracking of May high. The weekly opening range is now set just below the objective monthly open at 1.1422. A topside breach above this threshold is needed to invalidate the multi-week downtrend. Ultimately, a daily / weekly close above the 1.618% extension of the April decline and the November low-day close (LDC) at 1.1483/92 would be needed to suggest a more significant low is in place and a larger trend reversal is underway. Subsequent resistance objective eyed at the May and January lows near 1.1576/78.
A break / daily close below this pivotal support zone would threaten resumption / acceleration of the broader downtrend. Subsequent support objectives rest with the 2023 high at 1.1276 and the 2024 swing high at 1.1214. The next major technical consideration rests with the 100% extension of the January decline at 1.1178.
Bottom line: The monthly & weekly opening ranges are preserved just above critical support, and the focus is on a breakout in the days ahead for guidance. From a trading standpoint, rallies would need to be limited to 1.1422 IF price is heading lower on this stretch with a close below 1.1355 needed to fuel the next major leg of the decline.
The FOMC rate decision is on tap this afternoon and although no change is expected, traders will be parsing Fed Chair Warsh’s comments on inflation considering the recent escalation in the Iran conflict and subsequent surge in oil. Ahead of today’s meeting, Fed funds futures imply a roughly 34% chance of a hike this week and a 75% probability of at least one 25-basis-point increase by September. Keep in mind we still have key economic data in the days ahead with Core PCE, the Fed’ preferred inflationary gauge, and Eurozone inflation on tap into the close of the week / month. Stay nimble into the monthly cross and watch the weekly close for directional guidance heading into August. Review my latest Euro Technical Forecast for a closer look at the longer-term EUR/USD trade levels.
Key EUR/USD Economic Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Active Short-term Technical Charts Swiss Franc Short-term Outlook: USD/CHF Rally Presses Yearly Trend Resistance Canadian Dollar Short-term Outlook: USD/CAD Rebound Challenges the July Downtrend Australian Dollar Outlook: AUD/USD Rally Tests Make-or-Break Resistance Japanese Yen Short-term Outlook: USD/JPY Defends the Uptrend as the Range Tightens British Pound Short-term Outlook: GBP/USD Breakout Attempts Major Trend Reversal US Dollar Short-term Outlook: USD Uptrend Faces Make-or-Break Test After CPI Gold Price Short-term Outlook: XAU/USD Bulls Try to Carve Out a Low After 30% Drop --- Written by Michael Boutros, Senior Technical Strategist
Scotiabank strategists Shaun Osborne and Eric Theoret note that EUR/USD is consolidating within a very tight range in the mid-to-upper 1.13s. Stable European Central Bank (ECB) rate expectations and supportive yield spreads are helping limit downside pressure, while increasingly negative risk reversals point to stronger demand for protection against Euro (EUR) weakness. Technically, the pair remains bounded by support in the low 1.13s and resistance near 1.1480, with a clear break needed to establish the next directional move.
Options market prices Euro downside risk"Fundamental releases have been limited to third-tier German import price data, showing signs of a potential peak following a energy-driven surge that lifted the y/y pace above 6%. ECB rate expectations are steady following their recent fade, delivering fundamental support via yield spreads – with near-term risk centered on US developments as we look to the 2pm ET FOMC rate decision."
"The options market is signaling a somewhat worrisome development however, and follows the deterioration in speculative positioning revealed by the latest CFTC data."
"Risk reversals are pushing deeper into negative territory, closing in on their late June lows, indicating a growing premium for protection against EUR weakness."
"Bearish/neutral—the RSI is showing signs of a tentative recovery, remaining bearish below 50 but off its earlier lows in the high-30s. The local range from June is bound by support in the low-1.13s and resistance closer to 1.1480. We await a break"
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Scotiabank analysts warn that options markets are pricing greater protection against Euro exchange rate weakness, while ING sees scope for EUR/USD to revisit 1.15 after the Fed. The Euro to Dollar (EUR/USD) exchange rate traded around 1.1390 on Wednesday, holding within an unusually narrow range as markets waited for the Federal Reserve’s policy decision.
EUR/USD was marginally higher on the day after closing at 1.1386 on Tuesday. The pair has spent most of the past week between 1.1350 and 1.1420, with July’s broader range capped by a high near 1.1481 and a low around 1.1354.
Latest — Exchange Rates:
Euro to Dollar (EUR/USD): 1.138758 (+0.01%)
Pound to Dollar (GBP/USD): 1.329004 (+0.03%)
Dollar to Yen (USD/JPY): 163.82941 (-0.02%)
Scotiabank described the Euro as “unchanged vs. the USD” as it consolidated within “an incredibly tight range in the mid/upper-1.13s”.
That calm in spot trading is not being matched in the options market.
Scotiabank flagged a “somewhat worrisome development”, noting that risk reversals were “pushing deeper into negative territory” and approaching their late-June lows.
The move indicates “a growing premium for protection against EUR weakness”, suggesting investors are paying more to hedge against a decline even though the spot rate itself remains stable.
The bank linked that deterioration to the latest positioning data, which showed a weakening speculative backdrop for the Euro. In other words, the surface looks quiet, but traders underneath it are becoming more defensive.
Fundamental support has not disappeared. Scotiabank said ECB rate expectations were steady after their recent pullback, “delivering fundamental support via yield spreads”.
German import prices also showed tentative evidence that the energy-driven surge may be reaching a peak after lifting the annual rate above 6%. The release was not large enough to shift the currency, leaving US developments as the dominant near-term driver.
Image: EUR/USD 48-hour rolling price chart showing an early rise above 1.1400 followed by consolidation around 1.1390 The latest two-day chart above shows EUR/USD briefly climbing from below 1.1380 to around 1.1404 before giving back most of the move.
The pair then settled into an extremely compressed range, repeatedly finding buyers around 1.1383–1.1386 but struggling to maintain advances above 1.1395.
ING takes a more constructive view of what may follow the Fed decision.
The bank argues that precautionary positioning for a surprise US rate increase has helped keep the Dollar supported, but that resilience “will be tested heavily” if the Fed leaves rates unchanged as expected.
Markets were pricing roughly seven basis points of tightening, equivalent to around a 25–30% probability of a hike. A hold should therefore trigger some correction in short-dated US rates and allow investors to unwind defensive Dollar positions.
ING said a Fed hold could allow the Dollar “to reconnect with the signal from lower oil prices”, adding that “unless Fed Chair Kevin Warsh surprises with a hawkish spin, or we see more than two dissenters, we think the dollar will come under pressure today”.
For EUR/USD, that creates a potential route higher, although ING is not calling for an immediate breakout.
The bank said there was “a good chance the pair bottomed out last week” if markets retain a broadly constructive view on Middle East de-escalation.
A sustained move above 1.15 still requires “dovish Fed repricing” and a stabilisation in risk sentiment. Weakness in technology and semiconductor shares may cap the Euro even if the Dollar softens.
Near-Term EUR/USD Forecast: Scotiabank Watches 1.1350–1.1450 as ING Eyes a Return Towards 1.15 Scotiabank’s technical view remains “bearish/neutral”.
The relative strength index is showing “signs of a tentative recovery”, but remains below 50 and therefore still carries a bearish bias. The bank places near-term movement between 1.1350 and 1.1450, with the wider June range bounded by support in the low 1.13s and resistance near 1.1480.
ING’s immediate target sits inside that same range. As a baseline response to a modestly dovish Fed surprise, it expects EUR/USD to return to 1.1400–1.1450 over the coming days.
The contrast between the two banks is useful. Scotiabank sees defensive positioning and options demand warning that the Euro remains vulnerable; ING thinks much of the Dollar’s pre-Fed support may unwind once the decision is out.
A break above 1.1450 would strengthen ING’s argument that last week marked the low and bring 1.1480–1.1500 back into focus. A move beneath 1.1350 would validate the caution showing up in options markets and expose the lower part of the June range.
The spot market is quiet. The hedging market is not. Wednesday’s Fed decision should reveal which one has read the risk more accurately.
EUR/USD struggles below 1.1400 on Wednesday as traders brace for the Federal Reserve’s (Fed) interest-rate decision at 18:00 GMT, while the war in the Middle East fuels volatility across financial markets. At the time of writing, the pair trades around 1.1393, little changed on the day.
US President Donald Trump threatened heavy military action against Tehran following an Iranian missile attack on a US base in Jordan. The renewed hostilities came after a brief pause in attacks between the United States and Iran.
Oil prices climbed sharply on Wednesday, snapping a three-day sell-off as the return of normal shipping through the Strait of Hormuz appeared increasingly distant. West Texas Intermediate (WTI) trades around $83, up more than 5% on the day
The US Dollar initially gained following Trump’s remarks but later gave up some of its advance as traders moved to the sidelines ahead of the Fed’s monetary policy announcement. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.35 after touching an intraday high of 101.49.
The Fed is widely expected to leave interest rates unchanged within the 3.50%-3.75% range. However, the risk of a rate hike remains on the table if policymakers decide that a stronger response is needed to contain energy-driven inflation. The CME FedWatch Tool shows that traders price in around a 30% chance of a 25-basis-point increase.
With no updated economic projections or dot plot due at this meeting, the voting split and Fed Chair Kevin Warsh’s remarks will be closely watched to determine the future path of interest rates.
A surprise rate hike would strengthen the US Dollar and put fresh selling pressure on EUR/USD. Conversely, a less hawkish message could weigh on the Greenback and help EUR/USD reclaim the psychological 1.1400 mark.
Fed FAQs Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
The Euro (EUR) holds marginal gains against the US Dollar on Wednesday after finding some support in the mid-range of the 1.1300s earlier this week but remains unable to find acceptance above 1.1400. This leaves the EUR/USD pair vulnerable to further decline below the year-to-date low, at 1.1324, if a hawkish Federal Reserve (Fed) provides an additional boost to the US Dollar.
The Fed is expected to leave its benchmark interest rate on hold, although markets are pricing a 35$ chance of a quarter-point hike later in the day. A surprise tightening move is highly likely to send the US Dollar rallying, but a hawkish pause, the most likely scenario, might also provide support for the USD as it will cement hopes of a September hike.
In Europe, European Central Bank (ECB) council member and Cyprus Central Bank Governor Christodoulos Patsalides reiterated that higher Oil prices are boosting inflation risks, but he refused to give any hint about September’s monetary policy decision. The Euro showed no reaction to the comments.
Technical Analysis: Consolidating losses amid a bearish trend
EUR/USD trades around 1.1390, wavering in the lower range of July's trading channel and unable to put any significant distance from the 13-month low of 1.1324. Momentum indicators hint at a neutral-to-slightly-capped near-term bias with the Relative Strength Index (RSI) below the midline, and the Moving Average Convergence Divergence (MACD) edging marginally above zero, highlighting subdued bullish conviction.
On the topside, above 1.1400, bulls are likely to be challenged at 1.1440 (July 23 highs) ahead of the top of the last six weeks' trading range, at the 1.1480 area. On the downside, key support is at the mentioned 1.1324 low; further down, the next target is in the area between the 127.2% Fibonacci extension of the June 17-24 sell-off, at 1.1245, and the late May 2025 low, at 1.1210.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro Price This week The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Australian Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD0.09%0.33%0.00%0.08%0.85%0.44%0.46%EUR-0.09%0.22%-0.09%-0.01%0.77%0.35%0.37%GBP-0.33%-0.22%-0.41%-0.23%0.55%0.13%0.15%JPY0.00%0.09%0.41%0.06%0.84%0.43%0.36%CAD-0.08%0.00%0.23%-0.06%0.74%0.37%0.38%AUD-0.85%-0.77%-0.55%-0.84%-0.74%-0.41%-0.40%NZD-0.44%-0.35%-0.13%-0.43%-0.37%0.41%0.02%CHF-0.46%-0.37%-0.15%-0.36%-0.38%0.40%-0.02% 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 Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
ING’s Francesco Pesole notes that EUR/USD may have bottomed last week if markets maintain a constructive view on further geopolitical de-escalation. He argues a sustained move above 1.15 still requires dovish Federal Reserve (Fed) repricing and stabilised risk sentiment. With a light eurozone calendar, EUR/USD is expected to react mainly to the Federal Open Market Committee (FOMC), potentially returning to the 1.1400–1.1450 range in coming days.
Euro outlook tied to Fed repricing"The resumption of military strikes overnight is a reminder that caution remains warranted on EUR/USD. Even so, if markets are right to maintain a broadly constructive view on further de-escalation, there is a good chance the pair bottomed out last week. "
"For a sustainable move back above 1.15, two pieces are still missing: dovish Fed repricing, either through US data or communication, and a stabilisation in risk sentiment."
"While tech stocks’ independence from rates helped support EUR/USD during the spring, the current turmoil in the chip sector may now cap gains despite improving Middle East headlines."
"With little on today’s eurozone calendar, EUR/USD should take its cue from the FOMC. As a baseline reaction to a modest dovish Fed surprise, we look for a move back into the 1.1400-1.1450 range over the coming days."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The dollar’s next move hinges on tonight’s Fed decision, and this time markets genuinely don’t know what to expect. While economists still lean toward a hold—with CME FedWatch odds sitting near 68.5% for no change—Kevin Warsh’s hawkish rhetoric on having “no tolerance” for inflation, paired with growing internal FOMC support for a hike, has pushed hike odds up sharply from just 18% two weeks ago to over 30% today. Complicating things further, Warsh has deliberately scaled back forward guidance, meaning tonight’s press conference may offer fewer clues than usual.
The euro, meanwhile, has already had its say: the ECB held rates steady at 2.25% last Thursday, as expected, with Lagarde reaffirming the 2% target while flagging that energy-driven inflation risks from the Middle East conflict have yet to fully play out. Eurozone inflation cooled to 2.8% in June, but sticky services inflation near 3.5–4% keeps the door only cautiously open for a September move in either direction.
With EUR/USD trading near 1.1408, tonight’s Fed decision—not the ECB—is what will likely determine the pair’s next major direction.
EUR/USD Technical Analysis
As the EUR/USD chart shows, the pair has been consolidating within a defined range since late June, squeezed between an ascending trendline and a descending trendline, both converging around the current price near 1.1400. The 200-period EMA continues to slope lower above price, reinforcing a cautious backdrop ahead of tonight’s Fed decision.
Bullish Scenario Should the dollar weaken on a dovish Fed outcome, price would need to break above the converging trendlines and reclaim the 0.382 Fibonacci retracement near 1.1420, with the 200-period EMA just above acting as the next key test. A confirmed break above the EMA would open the path towards the 0.5 and 0.618 retracements near 1.1480–1.1500, where stronger resistance has capped rallies since late June.
Bearish Scenario Conversely, a hawkish surprise—or even a hike—could send the euro sharply lower, breaking both the ascending trendline and the psychological 1.1360 support level. A confirmed break here would expose the 1.1320 zone, the 0.0 Fibonacci level marking the origin of the entire recovery move, with further downside risk towards fresh multi-week lows if selling pressure accelerates.
With price coiled right at the intersection of both trendlines and the Fed decision just hours away, EUR/USD looks primed for a decisive move. Will the dollar reassert its dominance, or will the euro finally break free of this range?
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Commerzbank’s Antje Praefcke argues that the FOMC under Chair Kevin Warsh is likely to deliver a "hawkish hold", with markets already pricing at least one Fed rate hike by year-end. She highlights that recent declines in energy prices and a softer June inflation print reduce the odds of an immediate hike, limiting upside for the US Dollar and leaving EUR/USD sensitive to any scaling back of Fed tightening expectations.
Dollar vulnerable if hawkish hold disappoints"In all likelihood, this overall situation should lead to a “hawkish hold” this evening. The market expects at least one interest rate hike from the Fed by the end of the year and sees a chance that more could follow next year as well. It does not want to completely rule out an interest rate hike even today, even though it sees only a low probability for this to happen."
"After all, it is unlikely that Warsh will adopt an extremely hawkish stance given the recent drop in energy prices and a surprisingly low June inflation rate."
"For EUR/USD today, the key question is whether these expectations will be fueled - or not."
"If the market scales back its expectations because the (possibly shorter than usual) FOMC statement or Warsh’s press conference suggests that the Fed views price risks as manageable and, above all, temporary, a correction in the USD is certainly possible."
"Consequently, upward pressure on the US dollar driven by rising expectations of interest rate hikes is also unlikely."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Commerzbank’s Antje Praefcke argues that the FOMC under Chair Kevin Warsh is likely to deliver a "hawkish hold", with markets already pricing at least one Fed rate hike by year-end. She highlights that recent declines in energy prices and a softer June inflation print reduce the odds of an immediate hike, limiting upside for the US Dollar and leaving EUR/USD sensitive to any scaling back of Fed tightening expectations.
Hawkish hold risk for Dollar"In all likelihood, this overall situation should lead to a “hawkish hold” this evening. The market expects at least one interest rate hike from the Fed by the end of the year and sees a chance that more could follow next year as well. It does not want to completely rule out an interest rate hike even today, even though it sees only a low probability for this to happen."
"For EUR/USD today, the key question is whether these expectations will be fueled - or not."
"If the market scales back its expectations because the (possibly shorter than usual) FOMC statement or Warsh’s press conference suggests that the Fed views price risks as manageable and, above all, temporary, a correction in the USD is certainly possible."
"After all, it is unlikely that Warsh will adopt an extremely hawkish stance given the recent drop in energy prices and a surprisingly low June inflation rate."
"Consequently, upward pressure on the US dollar driven by rising expectations of interest rate hikes is also unlikely."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Key Points:Today's Federal Reserve decision and forward guidance are expected to drive volatility across DXY, EUR/USD and GBP/USD.The dollar remains supported by resilient U.S. economic data, safe-haven demand and expectations for higher interest rates.DXY continues holding above key moving averages, with $101.69 acting as the next major breakout resistance.EUR/USD remains capped below descending trendline resistance as policy divergence continues to favour the U.S. dollar.GBP/USD stays under pressure ahead of the Bank of England meeting as traders assess the outlook for UK interest rates.
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Dollar Strength Anchored by Fed Outlook as Euro and Sterling Face Policy Divergences The dollar index was supported recently by the possibility that the Fed might increase rates when it announces its decision due Wednesday, July 29. Traders have given the US central bank a decent probability of hiking rates this year, with chances of a move in July hovering around 33 percent and a higher chance of a move in September, consistent with stronger-than-expected US economic data, energy-related upside inflation risk and a more hawkish stance implied by the Fed’s June projections under Chair Kevin Warsh. Relative growth outperformance against other developed nations, foreign capital flows into US assets, and periodic safe-haven inflows stemming from geopolitical risk associated with the situation in the Middle East have also added to the dollar’s appeal against a basket of currencies.
In contrast, the euro was weighed down by the widening interest rate differential between the United States and the European Union. In June, the European Central Bank increased its key deposit facility rate to 2.25 percent, which was its first increase in three years, before keeping rates unchanged in its latest meeting on July 23. Growth in the euro area is sluggish, as the ECB staff projection was revised lower in June and energy prices stemming from the ongoing war in the region continued to feed into overall inflationary pressures.
Officials at the ECB have not sounded too urgent about hiking rates further, but the gap between interest rate policy in the euro area and the United States still favors the dollar even though some market participants anticipate a possible narrowing in rate expectations later this year.
Meanwhile, the main catalyst for the British pound in the coming session will be the Bank of England’s rate decision on Thursday. Bank Rate is at 3.75 percent after two consecutive hold decisions by the Monetary Policy Committee. This time around, policymakers appear split between those fearful of second-round inflationary effects and those concerned about softer labor market conditions as well as weaker than expected readings from the most recent consumer price data release.
UK growth is likely to decelerate this year as the economy grapples with high energy prices and tighter financial conditions, although further fiscal austerity is likely to remain a concern going forward. Relative rate expectations as well as domestic political or budgetary developments may drive the pair this week.
Market participants will closely scrutinize the Fed’s statement and accompanying news conference for clues as to how policymakers view the interplay between the persistence of inflation and weakness in economic activity. The statement could ultimately determine whether the dollar’s recent uptrend continues or if narrowing rate differentials could lead to gains for the euro and sterling in the short term.
U.S. Dollar Index (DXY) Technical Analysis: Uptrend Holds Despite Rejection at Major Resistance Dollar Index Price Chart – Source: Tradingview Despite selling pressure near 101.69, the USD Index is still maintaining its medium-term upward trend, staying above the ascending trendline as well as the 50-EMA (101.24) and 100-EMA (101.10). RSI has dropped to 46. Key resistance levels are located at 101.69, 102.06 and 102.42. On the flip side, support levels are seen at 100.96, 100.50 and 99.90.
As long as the USD Index is holding above 100.96, the uptrend should remain intact. A move above 101.69 could spark a fresh rally towards 102.06, while a break below 100.96 could see the index drop towards 100.50 and 99.90.
GBP/USD Technical Analysis: Bears Defend Former Channel Support
GBP/USD Price Chart – Source: Tradingview GBP/USD is still trading below the broken ascending channel after failing to reclaim former support. Price is also trading below the 50-EMA (1.3347) and 100-EMA (1.3360), while the RSI is around 40. Key resistance levels are located at 1.3349, 1.3416 and 1.3482. On the flip side, support levels are seen at 1.3272, 1.3210 and 1.3140.
As long as GBP/USD is holding below 1.3349, the outlook remains on the bearish side. If the pair breaks above 1.3349, the focus could turn towards 1.3416, while a move below 1.3272 would likely send the pair down to 1.3210.
EUR/USD Technical Analysis: Descending Trendline Continues to Cap Recovery EUR/USD Price Chart – Source: Tradingview Failing to reclaim the broken ascending trendline, EUR/USD is now moving below the 50-EMA (1.1399) and 100-EMA (1.1413), while the descending trendline continues to act as resistance. The pair is staging a recovery from the 1.1364 support area, though upside gains remain constrained by the descending trendline. RSI is at 54. Key resistance areas are located at 1.1410, 1.1443 and 1.1481. On the flip side, support levels are seen at 1.1364, 1.1328 and 1.1294.
Since the EUR/USD is trading below 1.1410, the bias remains on the sell side. If the pair manages to rise above 1.1410, the focus could turn towards 1.1443, or if 1.1410 rejects price, the EUR/USD may retrace towards 1.1364.
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The Dollar Index holds stable ahead of the FOMC tonight. The markets expect rates to remain unchanged with a 30% probability to a surprise rate hike. We continue to look at the near-term range of 100.70-101.50 to hold for now while Euro may trade in the 1.1350-1.1420 region. EURINR trades higher today above 109 but the risk of slipping towards 108.50 or lower remains on the cards. USDJPY remains bullish towards 164.50-165 with immediate stability for a few sessions while EURJPY can extend to 187/188 while above 186. USDCNY may trade within 6.75- 6.7850. Aussie may test 0.69 while Pound may find support near 1.3250 before bouncing towards 1.34. USDINR has tested 95.6250 before closing higher. There is some scope to see 95.50/25 this week before resuming the upmove towards 96 or higher again.
The US Treasury yields trade lower and could continue to decline for the near term before testing respective supports and resuming the uptrend in the longer run. The Fed meeting policy meeting tonight will need close watch where the markets expect the rates to be kept unchanged. The German Yields are also trading lower but could see limited room on the downside as support levels could soon produce a bounce and take the yields up to resume the broader uptrend. The 10Yr GoI has come down sharply. While below 6.80%, the yield is bearish for a test of 6.70/60% unless immediate reversal is seen. Overall near term view looks bearish.
Dow needs a sustained break above 53000 to extend its rally towards 53500-54000; otherwise, it is likely to remain within the 52000-53000 range. DAX also requires a sustained break above 25500 to rise towards 26000, failing which it could decline towards 25000-24800. Nifty needs to hold above 24000 to move higher towards 24100-24150. Nikkei remains bearish and can decline further towards 60000 or lower. Shanghai also continues to trade with a weak bias and can fall towards 3750-3700 while below 3900.
Crude prices can trade in a broad range amid continued uncertainty over geopolitical tensions in the Middle East. Gold can continue to trade within the broad $4000-$4200 range, while Silver is expected to remain range-bound between $55 and $65. Copper remains constructive above $6.30 and can rise towards $6.50. Natural Gas has turned weaker after breaking below $2.70 and can decline further towards $2.65.
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EUR/USD holds ground for the second successive day, trading around 1.1390 during the Asian hours on Wednesday. The US Dollar (USD) struggles against the Euro (EUR) as investors are closely monitoring the Federal Reserve’s (Fed) upcoming policy decision, where the central bank is widely expected to leave interest rates unchanged.
Traders are currently pricing in a 30.5% chance of an immediate rate hike, an unusually high level of uncertainty so close to a policy announcement. Looking further ahead, markets are also factoring in a 76.6% probability of a rate increase in September, reinforcing expectations that borrowing costs could remain elevated for longer.
The US Dollar (USD) may find support amid renewed hostilities in the Middle East, which have reignited geopolitical tensions, keeping investor focus firmly on inflationary risks and the broader interest rate outlook in the United States (US).
Geopolitical risk escalated sharply after the IRGC launched a surprise ballistic missile strike targeting a US military base in Jordan at approximately 5:45 PM ET. US Central Command reported that defense systems successfully intercepted all incoming missiles, preventing casualties and structural damage. Believed to be a direct countermeasure to recent US strikes against Iranian naval assets, the incident triggered immediate retaliation; CENTCOM subsequently executed precision airstrikes in Iraq aimed at neutralizing Iran-backed groups planning operations against US forces and Saudi energy infrastructure.
The European Central Bank (ECB) unanimously kept interest rates on hold at 2.25% on July 23, but strongly signaled a September rate hike. Leadership revealed that several Governing Council members pushed for an immediate increase, warning that sustained high energy prices risk driving up broader inflation through second-round effects.
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.
US Dollar Talking Points: The US Dollar retains a bullish look but the big question here is whether the rate hike odds that have priced in remain after tomorrow’s Fed meeting. While newly installed Fed Chair Kevin Warsh taking a hawkish approach makes sense up to this point the bigger question is whether he’ll push the envelope with stocks showing relative weakness, which would also possibly expose President Trump’s choice in the nomination process.
It’s one of those weeks where the range of possible outcomes is far and wide. As we go into tomorrow’s Fed meeting there’s a peculiar degree of indecision, as there’s an approximate 30% probability of rates being hiked tomorrow.
To this point, the Fed has often used messaging and media interviews to telegraph their actions to avoid unsettling market participants and, in turn, inviting volatility. But that’s not the case for tomorrow and this gives some potential for price movements.
CME Fedwatch Rate Probabilities for July FOMC Data taken from CME Fedwatch Going out to the end of the year shows a near 90% chance of at least one rate hike, with a 50% chance of at least two rate hikes.
If this were to happen, it would make President Trump’s choice to lead the Fed appear as through he’s directly refuting the President’s desire for rate cuts, especially considering this is into the lead-in to the US election in November.
This also helps to give some context to the US Dollar move of strength, as it was the last Fed meeting, on June 17th, where the USD broke out and ran to its current high. This also sets a very high bar for continued USD strength as not only will Warsh need to sound very hawkish tomorrow, but he’ll have to sound concerned that inflation isn’t going in the right direction which would lead to expectation for even more hawkishness down the road.
CME Fedwatch Rate Probabilities into End of 2026 Data taken from CME Fedwatch US Dollar – Is That All? The last Fed meeting in June was important as it was a quarterly rate decision, so we got updated guidance and projections, unlike tomorrow’s, which is just an announcement and a press conference. This puts even more emphasis on Kevin Warsh, but when we heard from the bank and the Summary of Economic Projections last month, DXY put in a massive breakout that pushed the USD up to a fresh yearly high, until resistance showed at the Fibonacci level of 101.80.
From there – profit taking showed in an orderly fashion in the form of a bull flag, and that led to the reaction from two weeks ago when below-expected CPI and PPI prints provided a dip with which buyers could react. I looked into those in the webinar at the time and bulls reacted in a big way, sparking a bullish trend that lasted for the next week and change.
More recently, however, the move has stalled ahead of that 101.80 level and given how aggressively rate hikes have priced-in as seen from the above two tables, it would seem the Fed would really have to shock the market to continue this rally in the Dollar.
Also notable – and addressed below – is the US Dollar from the perspective of counterparts and what could lead to a reliably stable trend in the DXY basket.
US Dollar Daily Price Chart Chart prepared by James Stanley; data derived from Tradingview USD Structure At this point a simple move of less-hawkishness can help to inspire a pullback and I think from Warsh’s perspective that would probably be the optimal outcome, especially considering the matter in USD/JPY and what could possibly happen to Treasury rates on the long-end of the curve if markets become unsettled.
As looked at coming into this week, there’s short-term bullish structure to match the long-term backdrop. So far, the ‘s1’ level has held support, but into tomorrow, the ‘s2’ zone is also viable, running from 100.86-100.99, with 100.65 and 100.36-100.44 below that.
US Dollar Four-Hour Price Chart Chart prepared by James Stanley; data derived from Tradingview USD/JPY
There’s another ascending triangle in USD/JPY and with rate decisions from both economies this week that can present a dangerous scenario.
As I said in the video I’d be surprised if a visit to 165.00 doesn’t bring some kind of reaction from policymakers, either in the form of an actual intervention or perhaps just a threat of one. The bigger question is whether that’ll work as anything more than a pullback and until the Bank of Japan sounds more concerned about inflation I have a hard time getting too aggressive on reversal scenarios in the pair, particularly with markets so amped up for US rate hikes into the end of this year.
I think this could have an outsized impact on the USD because that carry trade can be truly difficult to gauge in size. JPY is a mere 13.6% allocation of the USD basket but like we saw back in July of 2024, if that massive carry trade begins to unwind the Dollar selling could show in pairs even without the Japanese Yen, such as EUR/USD.
At this point there’s another ascending triangle setting up in USD/JPY and so far bulls haven’t been able to push beyond 164, which I think echoes that expectation of something happening around 165. But if we see Warsh show calm and perhaps Ueda sound a bit more hawkish, we could get a pullback that could allow for trend continuation.
USD/JPY Four-Hour Chart Chart prepared by James Stanley; data derived from Tradingview EUR/USD
The Euro is 57.6% of the DXY basket and despite those high odds for rate hikes in the US later this year, the pair has been rather unmoved of late – even with a wide open door for bears to make a push.
Last week saw a dovish ECB produce a bearish engulf on the daily to break a bear flag. A day later, the pullback saw sellers show up at prior support of 1.1402.
But now, not only is there no fresh low there’s a build of a falling wedge pattern. If we do hear Warsh as less-hawkish tomorrow this could give shorts excuse to pare positions and that could lead to a counter-trend move. Whether that becomes anything more than a pullback could, paradoxically, dial back to the argument around the Japanese Yen. But until there’s a closed body break on the daily above the 1.1500 level this market has a bearish big picture bias.
EUR/USD Four-Hour Chart Chart prepared by James Stanley; data derived from Tradingview GBP/USD When it comes to the Dollar I always try to retain some degree of balance, because, after all, it is a basket of underlying currencies rather than a market traded completely in a vacuum. GBP/USD still retains a bearish look and there’s a BoE rate decision on Thursday morning, less than 24 hours after the Fed.
The 1.3300 level remains a problematic spot but there’s a similar falling wedge that’s developed here, and if Warsh and perhaps even the BoJ can successfully tilt a pullback in the US Dollar and USD/JPY, there may be something to work with in Cable. First – bulls would need to take out 1.3325-1.3343, and then the 1.3390 area would be the next spot for them to encounter. But – at that point we can look for a higher-low and that’s something that could possibly lead-in to reversal scenarios in the pair.
GBP/USD Four-Hour Price Chart Chart prepared by James Stanley; data derived from Tradingview --- written by James Stanley, Senior Market Analyst, Global Macro
U.S. Dollar Retreats As CB Consumer Confidence Drops
DXY 280726 4h Chart U.S. Dollar Index is losing ground as traders focus on the weak CB Consumer Confidence report and react to the strong pullback in the oil markets.
CB Consumer Confidence decreased from 92.2 in June (revised from 91.2) to 90.8 in July, compared to analyst forecast of 92.3.
Today, traders also had a chance to take a look at the Case-Shiller Home Price Index report for May. The report showed that home prices increased by +1.6% on a year-over-year basis, compared to analyst consensus of +1.3%.
Oil prices pulled back by -5% amid signs of de-escalation in the Middle East. Falling oil prices pushed Treasury yields lower, which was bearish for the American currency.
Currently, U.S. Dollar Index is trying to settle below the support level at 101.15 – 101.30. In case this attempt is successful, U.S. Dollar Index will head towards the next support, which is located in the 100.50 – 100.65 range.
EUR/USD Rebounds As Oil Markets Dive EUR/USD 280726 4h Chart EUR/USD gains ground, supported by the strong sell-off in the oil markets. Falling Treasury yields provided additional support to EUR/USD. The yield of 2-year Treasuries pulled back towards the 4.26% level, while the yield of 10-year Treasuries settled below 4.60%.
EUR/USD failed to settle below the support at 1.1350 – 1.1365 and rebounded towards the 50 MA at 1.1406. In case EUR/USD settles above the 50 MA, it will get to the test of the nearest resistance level at 1.1420 – 1.1435. A move above the 1.1435 level will push EUR/USD towards the next resistance at 1.1485 – 1.1500.
GBP/USD Moves Away From Weekly Lows GBP/USD 280726 4h Chart GBP/USD is moving higher as traders focus on general weakness of the American currency.
In case GBP/USD manages to settle above the 1.3300 level, it will head towards the nearest resistance at 1.3335 – 1.3350. A move above 1.3350 will push GBP/USD towards the 50 MA at 1.3380. If GBP/USD climbs above the 50 MA, it will head towards the resistance at 1.3450 – 1.3465.
USD/CAD Pulls Back As Traders Take Some Profits Off The Table Ahead Of Fed Decision USD/CAD 280726 4h Chart USD/CAD is losing ground as traders monitor commodity markets and prepare for Fed decision, which will be released tomorrow. FedWatch Tool indicates that there is a 71.7% chance that Fed will leave the federal funds rate unchanged.
If USD/CAD stays below the 1.4100 level, it will head towards the 50 MA at 1.4073. A move below the 50 MA will push USD/CAD towards the nearest support level at 1.4010 – 1.4025.
USD/JPY Remains Stuck Below 164.00 USD/JPY 280726 4h Chart USD/JPY continues its attempts to settle above the resistance level at 163.50 – 164.00 despite falling Treasury yields. Traders ignore intraday dynamics of Treasury markets and focus on hawkish Fed policy outlook. The strong pullback in the oil markets did not provide support to the Japanese yen, which was a bearish sign for the currency.
A successful test of the resistance at 163.50 – 164.00 will push USD/JPY towards the 165.00 level. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
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I am already riding two EURUSD sell entries. Another possible sell opportunity could be forming for traders that are not in yet.EURUSD Possible Bearish ScenarioWatch for price to tap 4 Hour FVG (Purple) first.Watch for a bearish shift and bearish reversal signs in the FVG zone.Wait for all above to play out first then plan the sell entry, stops and targets with confidence.If price continues higher and breaks above the July 27 2026 high then trade setup is cancelled and if price breaks below the July 27 2026 low without tapping the 4H FVG then trade setup is cancelled.EURUSD 15 minute chart July 27 2026
A trader should always have multiple strategies all lined up before entering a trade. Never trade off one simple strategy. When multiple strategies all line up it allows a trader to see a clearer trade setup. We at EWF never say we are always right. No market service provider can forecast markets with 100% accuracy. Only thing we at EWF 100%, is that we are RIGHT more than we are WRONG.
Of course, like any strategy/technique, there will be times when the strategy/technique fails so proper money/risk management should always be used on every trade. Hope you enjoyed this article and follow me on social media for updates and questions> @AidanFXAt Elliottwave-Forecast we cover 78 instruments (Forex, Commodities, Indices, Cryptos, Stocks and ETFs) in 4 different time frames and we offer 5 Live Session Webinars everyday. We do Daily Technical Videos, Elliott Wave Trade Setup Videos and we have a 24 Hour Chat Room. Our clients are always in the loop for the next market move.
The US dollar continues to flex its muscles early on Tuesday.
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EUR/USD Technical Analysis
EUR/USD drops to 1.1362, breaking below its range and EMAs. Source: TradingView The Euro has gone back and forth during the course of the trading session here on Tuesday as we continue to hang on by a thread. We are at the bottom of a recent consolidation area, and I do think at least at this point in time there are a lot of questions to ask when it comes to the Euro. Interest rates in America will be a big driver typically of this currency pair, and despite the fact that rates have drifted a little bit lower, they are still uncomfortably high, and there are concerns in the Middle East, which has a major influence on that as well.
The recent area of consolidation could be in the process of trying to form a double bottom; we’ll just have to wait and see. Short-term rallies will more likely than not continue to be swimming upstream if recent history is to be believed.
GBP/USD Technical Analysis
GBP/USD slips to 1.3279, drifting below its EMAs near 1.33. Source: TradingView The pound initially tried to rally but then gave back gains as the market is still hanging around the 1.33 level. This is with elevated US rates. There are concerns in the Middle East, and sometimes traders will run to the US dollar in times of concern. It is possible that’s what’s going on here. The market is likely to continue to be noisy, but it has decidedly turned bearish over the last couple of weeks.
USD/CHF Technical Analysis USD/CHF grinds higher to 0.8198, breaking out above its EMAs. Source: TradingView And the US dollar continues to grind higher against the Swiss Franc. The positive swap differential favors the US dollar as traders continue to see value in the greenback. We had recently consolidated and now have broken out of that little consolidation range to show increasing bullish pressure.
The market is typically one that’s very choppy and somewhat sideways, and more of a grind even when it does trend, so patience is something that I typically find I have to employ here against the Franc. But getting paid at the end of every day is a huge bonus here with that positive swap, and right now I think that is one of the main drivers.
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Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.
The Euro (EUR) is failing to draw any significant support from the truce in the Middle East and the lower Oil prices and keeps heading south against the US Dollar (USD) on Tuesday. EUR/USD bears are testing fresh one-month lows below 1.1360, drawing near the year-to-date low of 1.1324.
Market optimism about a negotiated end of the US-Iran conflict and the 12% decline in Brent Oil prices have triggered a mild appetite for risk during the European session, with European stock markets showing marginal gains following a negative session in Asia.
Risk appetite, however, has not translated into a weaker US Dollar this time, as traders cling to hopes that the Federal Reserve (Fed) might deliver a surprise rate hike later this week. Futures markets are pricing a 35% chance of a 25 basis point hike on Thursday, up from 25% a week ago, according to data by the CME Group’s FedWatch Tool, underpinning support for the US Dollar, which has reached fresh monthly highs against a basket of currencies.
Technical Analysis: Below 1.1324, the next target is the 1.1245 area
EUR/USD trades at 1.1362, holding a mild bearish trend, after being rejected at the 1.1420 area on Monday, with price action approaching year-to-date lows. The 4-hour Relative Strength Index (14) is pulling lower from the neutral 50 line, and the Moving Average Convergence Divergence (MACD) has entered negative levels although it remains near zero. Momentum is flat to slightly bearish, rather than impulsively directional so far.
If the pair confirms below the bottom of the monthly channel at 1.1360, bears are likely to be tempted by the 2026 trading floor of 1.1324. Below here, the area between the 127.2% Fibonacci extension of the June 17-24 sell-off, at 1.1245, and the late May 2025 low, at 1.1210, emerges as the next target.
On the topside, Monday's high, at 1.1420, and the top of the monthly range at 1.1480 are the key levels to breach to ease bearish pressure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Dollar Index Price Chart – Source: Tradingview The U.S. Dollar Index continues to trade within a well-defined uptrend, holding above both the rising trendline and the 50-EMA ($100.52). Price is currently trading around $101.52, while remaining comfortably above the 100-EMA ($99.91). RSI has climbed to around 63, indicating bullish momentum without yet reaching overbought territory.
Immediate resistance is located at $101.65, followed by $102.06 and $102.42. Initial support stands at $101.06, with stronger support at $100.50 and $99.92.
The broader outlook remains bullish while DXY holds above $101.06. A sustained breakout above $101.65 would expose $102.06, while a break below $100.50 would weaken the uptrend and shift focus toward $99.92.
GBP/USD Technical Analysis: Sterling Tries to Stabilise Above $1.3260 Support
I am already riding two EURUSD sell entries. Another possible sell opportunity could be forming for traders that are not in yet.
EURUSD Possible Bearish Scenario
Watch for price to tap 4 Hour FVG (Purple) first. Watch for a bearish shift and bearish reversal signs in the FVG zone. Wait for all above to play out first then plan the sell entry, stops and targets with confidence. If price continues higher and breaks above the July 27 2026 high then trade setup is cancelled and if price breaks below the July 27 2026 low without tapping the 4H FVG then trade setup is cancelled.
EURUSD 15 Minute Chart July 27 2026
A trader should always have multiple strategies all lined up before entering a trade. Never trade off one simple strategy. When multiple strategies all line up it allows a trader to see a clearer trade setup. We at EWF never say we are always right. No market service provider can forecast markets with 100% accuracy. Only thing we at EWF 100%, is that we are RIGHT more than we are WRONG.
Of course, like any strategy/technique, there will be times when the strategy/technique fails so proper money/risk management should always be used on every trade. Hope you enjoyed this article and follow me on social media for updates and questions> @AidanFX
At Elliottwave-Forecast we cover 78 instruments (Forex, Commodities, Indices, Cryptos, Stocks and ETFs) in 4 different time frames and we offer 5 Live Session Webinars everyday. We do Daily Technical Videos, Elliott Wave Trade Setup Videos and we have a 24 Hour Chat Room. Our clients are always in the loop for the next market move.
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EUR/USD, Euro Talking Points: While the US Dollar has had a bullish outing for the past six months much of that move has been fueled by the Japanese Yen falling to fresh 40-year lows. The Euro is a much larger component of the DXY basket and since the June sell-off, sellers have largely been stalled. There remains technical structure in place for bears to make a run and this week’s FOMC meeting will probably be a big part of that.
It’s difficult for the US Dollar to go anywhere without at least some participation from the Euro. After all, the single currency is a whopping 57.6% of the DXY basket and the second largest component, the Japanese Yen, is a mere 13.6% composition. This is largely owed to when the basket was made and the fact that it was conglomeration of European currencies with the advent of the Euro that created such an outsized allocation.
There will, however, be times where capital flows can throw a wrench in the matter, and we had an example of this back in the summer of 2024. At the time growth in Europe wasn’t exactly in a great place, and as the world prepared for rate cuts from the FOMC, USD/JPY broke down in a very big way. That USD-weakness in an unwind of a massive carry trade drove Dollar weakness elsewhere, too, even in the Euro which saw EUR/USD pop up for a test and hold at the 1.1200 handle.
This is important, perhaps, for what might be around the next corner, but there’s a few pieces that would need to fall into place first for that to be a scenario to entertain.
For this week it’s all about the FOMC meeting. And perhaps surprising is just how hawkish Kevin Warsh has sounded since taking over at the Fed. This runs counter to the pledges Trump made on the lead-in to the nomination, even going as far as saying that a willingness to cut rates was a litmus test for whomever he would ultimately select. I wrote about this in an article earlier today, and since taking over at the Fed Warsh has made repeated comments about needing to tackle inflation. If one didn’t know any better they might think we have the reincarnation of Paul Volcker at the helm, although I think there’s something else going on there and we just might get the next data point in that series this week.
With inflation data high as Warsh took over, he needed to sound as though he was at least open to rate hikes or else markets would just simply plot for more currency debasement and weak monetary policy. Like we saw with the Fed’s rate cuts in 2024 just ahead of the US election, market participants aren’t stupid – and if inflation is high and the Fed is cutting rates, well inflation expectations go up. That drives up longer-term bond yields, and, in-turn, mortgage rates.
The Fed cutting rates doesn’t mean the Treasury yield curve is going to drop and in cases like we saw there, it can have a counter-active effect on long-term rates.
EUR/USD Weekly Chart: Rate Anticipation Driving the Flows Chart prepared by James Stanley; data derived from Tradingview Warsh knows this, and he probably also knows that while stocks were near highs even as inflation remained elevated it made little sense for him to pledge to rate cuts later in the year, even if that’s what everyone knows President Trump wants to see and hear, particularly as we go into mid-term elections.
The question for now is whether Warsh will retain that hawkish rhetoric on Wednesday as equity prices have started to show vulnerability? The consequences of such could be wide ranging, as a hawkish Warsh would not only expose the possibility of more weakness in equities, but also USD-strength which would then put pressure on the Bank of Japan at their rate decision a day later. And USD/JPY getting closer to a 165 handle brings on the threat of intervention which could serve similar impact as what we saw back in July of 2024.
Right now – there’s the building expectation that the Fed may hike rates to address still-elevated inflation. This is what we saw take over in June after the FOMC meeting on the 17th, which led to a downside break in EUR/USD.
EUR/USD Daily Chart Chart prepared by James Stanley; data derived from Tradingview EUR/USD: An Open Door for Bears At this point pretty much the only bullish thing that can be claimed on EUR/USD is the fact that the sell-off has seemingly stalled below the 1.1400 handle. But, so far, sellers have shown reaction in the way that one would probably want to see, given the resistance on the underside of the channel making up the bear flag formation, which was broken after ECB last week with a bearish engulf pattern.
The key for whether this can continue likely boils back to Kevin Warsh and the Fed, and if the Fed does continue with a hawkish bias then the argument for a downside break and test of that prior low of 1.1325 makes sense.
Below that, next supports are 1.1275 which is a key Fibonacci level and then the 1.1200 handle that capped the highs back in 2024 as markets were priming for the Fed to start cutting rates.
For invalidation – there were a few different tests around the 1.1469 level but really I think it’s a closed body break on the daily chart above the 1.1500 handle that would be needed to signify failure from sellers.
EUR/USD Four-Hour Price Chart Chart prepared by James Stanley; data derived from Tradingview --- written by James Stanley, Senior Market Analyst, Global Macro
EUR/USD traded near 1.1370 as the euro remained under pressure against a resilient US dollar. The pair continues to consolidate after a steady decline from May's highs, with traders awaiting fresh economic catalysts. Support at 1.1350 remains in focus, while a move above 1.1450 would be needed to improve the near-term outlook. EUR/USD continues to trade with a bearish bias after failing to sustain its recovery attempts over the past month. The pair has now retraced much of its spring rally and is hovering just above the 1.1300 area, a level that has acted as support several times this year.
The broader trend still favours the US dollar, with traders reluctant to challenge the greenback while uncertainty over interest rates and global growth persists. Unless the euro can reclaim higher ground quickly, rallies are likely to attract fresh selling interest.
EUR/USD Is Running Out of Support The daily chart shows a market that continues to make lower highs and lower lows, confirming that sellers remain in control.
The recent consolidation around 1.1370 does little to change that picture. Instead, it looks more like a pause within the broader decline than the beginning of a sustained recovery.
The 1.1300–1.1330 region is now the most important technical area on the chart. It combines previous swing lows and has repeatedly halted declines over recent months. If buyers fail to defend this zone, the technical picture would deteriorate significantly.
A Break Below 1.1300 Could Accelerate Selling The market is approaching an important decision point.
A sustained move below 1.1300 would confirm that the latest consolidation has failed and could encourage another wave of selling. Once that level gives way, downside momentum could build quickly as stops below support are triggered.
Conversely, buyers need to push the pair back above 1.1450 to ease immediate downside pressure. Until then, any recovery is likely to be viewed as corrective rather than the start of a new uptrend.
EUR/USD Price Analysis EUR/USD is trading around 1.1370 after several sessions of sideways price action. While volatility has eased, the overall structure remains negative.
Support is seen at 1.1300, followed by 1.1250 if that floor breaks. Initial resistance comes in around 1.1450, with stronger selling pressure likely to emerge near 1.1500.
For now, the path of least resistance remains to the downside while the pair continues trading below recent swing highs.
EUR/USD Outlook The near-term outlook remains bearish.The current consolidation appears to be a pause after the recent decline rather than evidence that a meaningful bottom has formed. As long as EUR/USD remains below 1.1450, sellers retain the advantage.
A break beneath 1.1300 would likely become the next major technical signal and could mark the beginning of another leg lower. Until buyers reclaim higher levels, the euro is likely to remain on the defensive against the US dollar.
Why is EUR/USD falling today?
EUR/USD remains under pressure as the US dollar continues to outperform, while the pair’s technical structure still favours sellers.
What is the key support level for EUR/USD?
The most important support sits between 1.1300 and 1.1330. A break below that zone would strengthen the bearish outlook.
Is EUR/USD still in a downtrend?
Yes. The daily chart continues to show lower highs and lower lows, suggesting the broader trend remains bearish until the pair breaks back above 1.1450.
U.S. Dollar Is Losing Some Ground As Durable Goods Orders Miss Estimates
DXY 270726 4h Chart U.S. Dollar Index is losing some ground as traders react to the Durable Goods Orders report. The report indicated that Durable Goods Orders increased by +0.3% month-over-month in June, compared to analyst forecast of +2.5%.
Today, traders also had a chance to take a look at the Dallas Fed Manufacturing Index report for July. The report showed that Dallas Fed Manufacturing Index improved from 0.0 in June to +1.3 in July, compared to analyst consensus of -1.
In case U.S. Dollar Index pulls back below the support at 101.15 – 101.30, it will head towards the 50 MA at 101.02. A move below the 50 MA will push U.S. Dollar Index towards the next support level at 100.50 – 100.65.
EUR/USD Gains Ground As Ifo Business Climate Exceeds Expectations EUR/USD 270726 4h Chart EUR/USD gained some ground as traders focused on the better-than-expected Ifo Business Climate report from Germany. The report indicated that Business Climate improved from 85.7 (revised from 85.6) in June to 86.6 in July, compared to analyst forecast of 86.
In case EUR/USD settles above the 1.1400 level, it will get to the test of the nearest resistance level, which is located in the 1.1420 – 1.1435 range. On the support side, EUR/USD needs to settle below the 1.1350 level to gain downside momentum in the near term. In this case, EUR/USD will head towards the next support at 1.1270 – 1.1285.
GBP/USD Tests The 1.3300 Level GBP/USD 270726 4h Chart GBP/USD is losing ground despite the strong sell-off in the oil markets. Oil prices are down by -9% amid signs of de-escalation in the Middle East.
A move below the 1.3300 level will push GBP/USD towards the support level at 1.3250 – 1.3265. RSI is in the moderate territory, so there is plenty of room to gain downside momentum in case the right catalysts emerge.
On the upside, a successful test of the resistance at 1.3335 – 1.3350 will open the way to the test of the 50 MA at 1.3406. If GBP/USD climbs above the 50 MA, it will head towards the resistance level at 1.3450 – 1.3465.
USD/CAD Attempts To Settle Above 1.4100
USD/CAD 270726 4h Chart USD/CAD is moving higher despite rising precious metals markets. Other commodity-related currencies are mixed in today’s trading session.
The nearest resistance level for USD/CAD is located in the 1.4125 – 1.4140 range. A move above the 1.4140 level will push USD/CAD towards the next resistance level at 1.4235 – 1.4250.
USD/JPY Is Stuck Below The 164.00 Level USD/JPY 270726 4h Chart USD/JPY continues its attempts to settle above the resistance level at 163.50 – 164.00 despite falling Treasury yields. The yield of 2-year Treasuries pulled back towards 4.30%, while the yield of 10-year Treasuries settled below 4.65%. Bond traders reacted to the sell-off in the oil markets.
It should be noted that forex traders remain focused on longer-term Fed policy outlook. The market expects that Fed will start a rate hike cycle to fight inflation, while the Bank of Japan would be forced to stay dovish due to the weakness of the Japanese economy.
If USD/JPY settles above the 164.00 level, it will gain additional upside momentum and move towards the 165.00 level. It remains to be seen whether BoJ is ready to intervene to provide support to the Japanese currency.
If you’d like to know more about how to trade forex, please visit our educational area.
Bank of America remains short EUR/USD and forecasts a fall to 1.12 as US yield support and renewed energy pressures continue to favour the Dollar. Foreign exchange analysts at Bank of America remain tactically short the Euro against the US Dollar, arguing that calm conditions across G10 foreign exchange markets are masking much larger risks stemming from monetary policy, geopolitics and fiscal developments.
The bank believes the US Dollar should continue to draw support from relatively high US yields and lingering uncertainty ahead of key policy decisions, leaving the EUR/USD exchange rate vulnerable in the near term despite the pair's broader recovery over recent months.
Latest — Exchange Rates:
Euro to Dollar (EUR/USD): 1.13747 (+0.03%)
Pound to Dollar (GBP/USD): 1.330353 (-0.16%)
Dollar to Yen (USD/JPY): 163.69747 (-0.09%)
According to Bank of America's latest forecasts, EUR/USD is expected to weaken towards 1.12 during the third quarter of 2026 before recovering to 1.15 by year-end and strengthening further towards 1.20 during 2027 as the Dollar's cyclical advantages gradually fade.
Reflecting that view, the bank is maintaining a tactical bearish position through a three-month 1.15/1.13 EUR put spread, looking for limited downside in the single currency over the coming months.
Image: EUR/USD bank forecasts July 2026 survey poll results carried out by Exchange Rates UK Research Team The latest Exchange Rates UK Research median bank forecast shows EUR/USD expected to strengthen over the medium term despite some banks retaining a cautious short-term outlook.
Bank of America argues that investors have become too comfortable with subdued volatility across major currencies even as significant policy risks continue to build.
"Quiet G10 FX markets are masking larger policy risks," the bank argues, pointing to uncertainty surrounding the Federal Reserve, the Bank of Japan and UK fiscal policy.
While those themes extend beyond Europe, they reinforce the bank's preference to remain positioned in favour of the Dollar against lower-yielding currencies.
Goldman Sachs shares the cautious near-term outlook for the Euro, arguing that the single currency remains caught between unfavourable interest-rate dynamics and renewed energy market pressures.
The bank said the Euro remains "stuck in the shadow" of the Dollar, with investors continuing to favour higher-yielding currencies while geopolitical tensions keep energy prices elevated.
Goldman added that higher oil prices have once again deteriorated Europe's terms of trade, limiting the Euro's ability to outperform even as the European Central Bank has largely completed its tightening cycle.
Dollar Yield Advantage Still Dominates Near-Term EUR/USD Outlook Although both banks expect the Dollar's strength to moderate over the longer term, they see little reason to abandon defensive positioning ahead of several important central bank meetings.
Higher US Treasury yields continue to provide an attractive return advantage over much of the developed world, while uncertainty over Federal Reserve policy is encouraging investors to retain Dollar exposure.
Bank of America's longer-term projections nevertheless suggest the Dollar's yield advantage should gradually erode, allowing EUR/USD to recover from an expected third-quarter low near 1.12 to around 1.20 during 2027.
For now, however, both Bank of America and Goldman Sachs believe the balance of risks remains tilted towards a stronger Dollar, with energy prices, yield differentials and global policy uncertainty continuing to favour the greenback over the Euro.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
EUR/USD reverses its early gains on Monday and moves toward filling the bullish gap at the weekly open. The pair initially rose after a temporary pause in attacks between the United States (US) and Iran improved risk sentiment, sent Oil prices sharply lower and weighed on the US Dollar (USD).
At the time of writing, EUR/USD trades around 1.1373, retreating from an intraday high of 1.1418.
The initial optimism proved short-lived as US officials stressed that military action against Iran had not been ruled out. Iranian Foreign Ministry spokesperson Esmaeil Baghaei said the Strait of Hormuz remained closed and added that there were currently no direct talks with the United States.
The lack of concrete negotiations keeps geopolitical risks alive, limiting the downside in both the US Dollar and Oil prices.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades near 101.46, recovering from an intraday low of 101.12. Meanwhile, softer-than-expected US Durable Goods Orders did little to stop the broad recovery in the US Dollar.
West Texas Intermediate (WTI) Oil trades around $83.20 per barrel after rebounding from an intraday low of $81.28, although it is still down more than 6% on the day. Elevated energy prices keep inflation risks in focus and reinforce expectations that the Federal Reserve (Fed) may need to raise interest rates.
The Fed announces its interest-rate decision on Wednesday. The central bank is widely expected to leave rates unchanged, although traders still price in a 33% chance of a hike, according to the CME FedWatch Tool. The probability of an increase in September stands near 79%.
Economists at DBS Group Research note that “the Fed faces a tough call: sticky inflation argues for hikes, but soft demand, weak investment, muted wage growth, and heavy debt issuance support holding rates steady for now.”
Across the Atlantic, the European Central Bank (ECB) left interest rates unchanged last week and reiterated that future policy decisions would depend on incoming data, the inflation outlook and the risks surrounding it. Traders look ahead to the preliminary Eurozone Core Harmonized Index of Consumer Prices (HICP) data for July, due on Friday.
Brown Brothers Harriman’s (BBH) Elias Haddad notes that Eurozone leading indicators, including Germany’s IFO, Purchasing Managers’ Index (PMI) and ZEW, point to improving activity. With inflation still above target, Haddad says the data reinforce the case for the European Central Bank (ECB) to resume raising rates in September, but argues that already-priced tightening and nearby technical resistance may limit further Euro upside.
Eurozone data support cautious Euro gains"Leading indicators point to a recovery in Eurozone economic activity. Germany’s IFO business climate index improved to 86.6 in July vs. 85.7 in June entirely driven by expectations. That echoes the increases seen in the Eurozone July PMI and ZEW index."
"Bottom line, a recovery in Eurozone economic activity and above target inflation reinforces the case for the ECB to resume raising rates in September."
"That’s unlikely to offer EUR much upside traction as the swaps curve already price in 90% odds of a 25bps rate hike at the September 10 meeting."
"The next key resistance for EUR/USD is at 1.1483, the July 15 high, while support is at 1.1335, the June 24 low."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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The US dollar softened a bit in the early part of the Monday session, as the missiles in the Middle East have stopped, for the moment.
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EUR/USD Technical Analysis
EUR/USD trades at 1.13866, pressing the 1.1400 floor of its range below both moving averages. Source: TradingView The euro gapped higher against the US dollar and then took off as the conflict in the Middle East seems to be slowing down again. That being said, with those falling yields in America, it makes sense that the dollar lost a little bit of strength, but we’ve seen selling of the euro come back into play, which makes sense. And now it looks like we are possibly continuing this choppy and volatile negative behavior. The 1.14 level continues to be an area of interest as we are just simply bouncing around with the latest headlines.
GBP/USD Technical Analysis GBP/USD trades at 1.33125, slipping toward 1.3300 below both moving averages. Source: TradingView The British pound took off to the upside, gapped higher to kick off the session, reached the area of the 50-day EMA, and then turned around to show signs of negativity. We find ourselves sitting just above the 1.33 level again. This is an area that has been important multiple times. At this juncture, it looks like support, but if the market breaks down below there, it could lead to fresh selling. We’ll just have to wait and see. Rallies at this point continue to see selling pressure, as we have earlier this morning, based on the last week or so.
USD/JPY Technical Analysis
USD/JPY trades at 163.632, extending its climb above 163 and both moving averages. Source: TradingView The US dollar has gapped lower to kick off the trading session on Monday against the Japanese yen, but turned around to show signs of strength again as despite the fact that rates are falling in America; the interest rate differential between these two currencies is still very wide, so that boosts the carry trade. We’ve broken above massive swing highs going back to the 1980s, so it’s difficult to imagine this market’s going to turn around on a dime. And ultimately, we’re in a nice 45-degree bullish trend, so by all accounts, the chart looks just as bullish now as it did a few days ago.
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The Euro (EUR) gives back a majority of its early gains against the US Dollar (USD) after failing to rise above the intraday high of 1.1418 on Monday. During European trade, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades almost 0.2% higher to near 1.1395.
The major currency pair surrenders early gains as the US Dollar (USD) bounces back after a weak start of the week. The US Dollar started lower as the pause in military aggression between the United States (US) and Iran over the weekend diminished the appeal of safe-haven assets.
This week, major triggers for the pair will be the Federal Reserve’s (Fed) monetary policy announcement on Wednesday, and the release of the Eurozone Harmonized Index of Consumer Prices (HICP) data for July on Friday.
Investors expect the Fed to leave interest rates unchanged in the range of 3.50%-3.75% again and deliver no monetary policy guidance, while warning of upside inflation risks.
On the Eurozone front, the inflation data will influence the European Central Bank‘s (ECB) interest rate expectations, as officials have expressed concerns regarding prolonged elevated inflationary pressures.
EUR/USD technical analysis
EUR/USD trades higher at around 1.1392, but is keeping a mildly bearish near-term tone as the 20-day Exponential Moving Average (EMA) at around 1.1419 continues to act as a key barrier. The pair has also faced rejection near the breakdown region of the 20-day EMA, which is around 1.1420.
The Relative Strength Index (RSI) around 43 suggests subdued bearish momentum rather than outright oversold conditions.
On the topside, initial resistance is located at the former channel floor turned barrier near 1.1420, with the upper channel boundary around 1.1550 acting as the next key cap if buyers regain traction. On the downside, immediate support is the prior trend-line reaction levels around 1.1381, with a deeper slide exposing structural support near 1.1312.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator Fed Interest Rate Decision The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).
HSBC strategists see EUR/USD at risk of moving lower as the European Central Bank (ECB) maintains a cautious, data-dependent stance and refrains from signalling further rate hikes. They note that Euro (EUR) support from higher yields is fragile, while weak eurozone growth, rising energy costs and deteriorating terms of trade could increasingly weigh on the Euro against the US Dollar (USD).
Euro support seen as increasingly fragile"On 23 July, the European Central Bank (ECB) held rates at 2.25% and reiterated a data-dependent, meeting-by-meeting stance."
"This message underwhelms and weakens support for EUR/USD."
"EUR/USD has been remarkably stable over the last month propped up by higher yields as markets mark up inflation and tightening expectations in response to rising energy prices."
"But that’s a fragile kind of support and only lasts as long as the ECB is perceived as prepared to deliver."
"Without a firmer commitment to support interest rates, we think EUR/USD is likely weaken as investors refocus on growth downside and terms-of-trade risks."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
EUR/USD enters the final week of July at 1.1369. Friday’s modest decline in energy prices reduced expectations that the Federal Reserve could raise rates as early as its upcoming meeting, scheduled for Tuesday and Wednesday.
At the same time, the main currency pair remains very close to the monthly low recorded in late June. Markets continue to price in at least one Fed rate hike before the end of the year.
Inflation risks have risen following a renewed escalation in the US–Iran conflict. Restrictions on the movement of energy tankers in the Persian Gulf and the Red Sea have pushed oil and fuel prices higher.
Additional support for the dollar is coming from strong US economic data. S&P PMIs showed the fastest pace of private business activity growth this year. Meanwhile, the number of initial jobless claims fell at the fastest pace in nearly six decades, confirming the resilience of the labour market.
Technical Analysis
On the H4 chart of EUR/USD, the market has formed a consolidation range around the 1.1389 level, currently extending between 1.1336 and 1.1413. This range is nearing completion. An upside breakout would suggest a corrective move towards 1.1420, followed by a decline to 1.1313. A direct downside breakout would open the way for a move to 1.1313. The MACD indicator supports this scenario, with its signal line below zero and pointing firmly downwards, reflecting continued bearish momentum.
On the H1 chart, the market has completed an upward move to the 1.1414 level. A consolidation range is currently forming below this level. Today, a move lower to 1.1390 is expected, followed by a move higher to 1.1420, and then a decline to 1.1370, with scope for the trend to extend to 1.1313. The Stochastic oscillator confirms this scenario, with its signal line below 80 and pointing downwards towards 20, indicating increasing short-term downside pressure.
Conclusion EUR/USD remains under pressure as it approaches the final week of July, hovering near monthly lows. The modest retreat in energy prices at the end of last week briefly reduced expectations of an immediate Fed rate hike, but markets continue to price in at least one increase before the end of the year. Renewed US–Iran tensions and supply disruptions in the Persian Gulf and the Red Sea have pushed oil prices higher, reinforcing inflation risks. Strong US economic data – including robust PMI readings and a sharp decline in jobless claims – continue to support the dollar. Technically, the pair may see a temporary corrective move towards 1.1420, but the broader bearish structure remains intact, with downside potential towards 1.1313. The Federal Reserve meeting this week will be the key catalyst.
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US Dollar News: Fed and ECB Outlook Shape FX Markets The U.S. dollar, euro and British pound enter a pivotal week as investors prepare for the Federal Reserve’s July 29 to 30 meeting and the ECB’s decision last week while new data comes through. Most analysts expect that the Fed will leave rates where they are, although the market will be watching out for clues from Chair Jerome Powell given that the latest US data has confirmed the strength of the economy.
June retail sales were up by 0.2% on the month, while the control group increased by 0.4%, and initial claims for unemployment benefits dropped to 208,000, a three-month low, underlining the strength of the consumer and the labour market. This week brings out the second-quarter GDP, the PCE inflation print for June and July non-farm payrolls which could alter thinking around the second half of the year.
The ECB decided to keep its deposit rate at 2.25% as it sees inflation edging toward its 2% target while remaining data-dependent. ECB President Christine Lagarde said growth remains weak, with members continuing to assess the impact of the economic effect of trade and higher energy costs on the economic environment.
Sterling remains supported by expectations that the Bank of England will proceed cautiously after it kept Bank Rate at 3.75%, and it sees the UK policymakers juggle between curbing inflation and a steady wage-growth and a cooling labour market. UK mortgage approvals, consumer credit and business surveys are released this week as they provide evidence for the economy ahead of the next Bank of England meeting.
Dollar Index (DXY) Technical Analysis: Uptrend Holds Above Key Support Dollar Index Price Chart – Source: Tradingview The U.S. Dollar Index is maintaining a healthy uptrend after bouncing off support in the 100.50 zone along the uptrend line. Currently, the index trades at 101.28, keeping the 50-day EMA (101.12) and 100-day EMA (101.01) beneath the index level. The RSI is sitting at 53.
Resistance sits at 101.65, with further levels at 102.06 and 102.42. Support is found initially at 101.06, then at 100.50 and 99.92.
The index is trading above the 101.06 support line; if the index stays above this, bulls are in control. If the index moves above 101.65, it strengthens the bullish view and raises the prospect of a move to 102.06. If the index dips below the 100.50 support, it reduces bullish momentum and opens the prospect of a move to 99.92.
GBP/USD Technical Analysis: Recovery Faces Strong Resistance Zone GBP/USD Price Chart – Source: Tradingview GBP/USD is showing signs of stabilisation after moving down for quite some time. The pair is currently trading at $1.3333. It is attempting to stabilise just below a major resistance area. The 50-day EMA (1.3378) and 100-day EMA (1.3377) are both above it.
Support is initially found at 1.3305, then at 1.3218. Resistance is initially found at 1.3356, then at 1.3400 and 1.3430.
The index has not been able to recover the $1.3356 level; it remains under the overall pressure of sellers. If the index moves down through 1.3305, it could extend the losses towards 1.3218. However, if the pair closes above 1.3356, the downtrend weakens and the prospects for a rise to 1.3400 increase.
EUR/USD Technical Analysis: Bears Defend Key Triangle Resistance EUR/USD Price Chart – Source: Tradingview EUR/USD remains bearish after testing the top boundary of the triangle and the two moving average lines without being able to move past them. At present, the index is trading at 1.1395; the 50-day EMA (1.1408) and 100-day EMA (1.1420) are above it and the RSI is at 48.
Support is found initially at 1.1364, then at 1.1325. Resistance is initially found at 1.1410, then at 1.1443 and 1.1481.
The short-term bias remains bearish while EUR/USD trades below 1.1410. A fall below the 1.1364 level opens the prospect of a move to 1.1325. A move above the 1.1410 resistance line improves the outlook and increases the possibility of a move to 1.1443.
ING’s Francesco Pesole notes that EUR/USD has rebounded above 1.140 on lower Oil prices but argues the move looks optimistic without a clear de-escalation in geopolitical tensions. Pesole stresses that elevated European gas prices are hurting the Euro’s terms of trade, while upcoming Eurozone data are unlikely to deliver enough domestic support to offset Dollar-safe-haven and Fed-related pressures.
Gas prices and geopolitics weigh on euro"EUR/USD has bounced back above 1.140 as oil prices dropped sharply today. Still, that move looks somewhat optimistic given the absence of a clear de-escalation path. Any renewed military strikes could quickly send Brent back to $100/bbl and EUR/USD below 1.1380."
"Gas prices are another reason we remain cautious on EUR/USD unless tensions ease quickly. Even after today's decline, TTF is trading at €58/MWh, more than 30% above levels at the start of July and close to the March highs."
"So while Brent is nowhere near its peaks, gas is. Given its importance in eurozone energy imports, the euro's terms of trade – statistically the most important medium-term driver of EUR valuation – are also hovering near March lows and at levels comparable to 2023."
"Potential precautionary USD buying ahead of the FOMC may also weigh on the pair into Wednesday."
"On Friday, eurozone CPI is expected to rise above 3.0%, but with core inflation still near 2.5%, we do not think that will trigger aggressive hawkish repricing. Markets price 42bp from the European Central Bank by year-end, but that outlook should remain highly sensitive to ongoing oil volatility."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
EUR/USD enters the final week of July at 1.1369. Friday's modest decline in energy prices reduced expectations that the Federal Reserve could raise rates as early as its upcoming meeting, scheduled for Tuesday and Wednesday.
At the same time, the main currency pair remains very close to the monthly low recorded in late June. Markets continue to price in at least one Fed rate hike before the end of the year.
Inflation risks have risen following a renewed escalation in the US–Iran conflict. Restrictions on the movement of energy tankers in the Persian Gulf and the Red Sea have pushed oil and fuel prices higher.
Additional support for the dollar is coming from strong US economic data. S&P PMIs showed the fastest pace of private business activity growth this year. Meanwhile, the number of initial jobless claims fell at the fastest pace in nearly six decades, confirming the resilience of the labour market.
Technical analysis
On the H4 chart of EUR/USD, the market has formed a consolidation range around the 1.1389 level, currently extending between 1.1336 and 1.1413. This range is nearing completion. An upside breakout would suggest a corrective move towards 1.1420, followed by a decline to 1.1313. A direct downside breakout would open the way for a move to 1.1313. The MACD indicator supports this scenario, with its signal line below zero and pointing firmly downwards, reflecting continued bearish momentum.
On the H1 chart, the market has completed an upward move to the 1.1414 level. A consolidation range is currently forming below this level. Today, a move lower to 1.1390 is expected, followed by a move higher to 1.1420, and then a decline to 1.1370, with scope for the trend to extend to 1.1313. The Stochastic oscillator confirms this scenario, with its signal line below 80 and pointing downwards towards 20, indicating increasing short-term downside pressure.
ConclusionEUR/USD remains under pressure as it approaches the final week of July, hovering near monthly lows. The modest retreat in energy prices at the end of last week briefly reduced expectations of an immediate Fed rate hike, but markets continue to price in at least one increase before the end of the year. Renewed US–Iran tensions and supply disruptions in the Persian Gulf and the Red Sea have pushed oil prices higher, reinforcing inflation risks. Strong US economic data – including robust PMI readings and a sharp decline in jobless claims – continue to support the dollar. Technically, the pair may see a temporary corrective move towards 1.1420, but the broader bearish structure remains intact, with downside potential towards 1.1313. The Federal Reserve meeting this week will be the key catalyst.
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UOB strategists highlight that EUR/USD slipped slightly to 1.1369 as comments from European Central Bank (ECB) Governing Council member Gediminas Simkus suggested a rate increase remains more likely than a hold. They also now expect one final 25 bps ECB hike in September to 2.50% on the deposit rate, followed by an extended pause, with risks skewed to further tightening if energy prices stay elevated.
Mild Euro pullback but hawkish ECB tilt"The European Central Bank (ECB) left all three policy rates unchanged at its 23 Jul meeting, keeping the deposit rate at 2.25%."
"EUR/USD slipped 0.1% to 1.1369, as ECB Governing Council member Gediminas Simkus indicated that a rate increase remains more likely than a hold."
"We now expect one final 25 bps rate hike in Sep, taking the deposit rate to 2.50%, followed by an extended pause."
"However, additional tightening cannot be ruled out if elevated energy prices persist and lead to stronger second-round inflation effects."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
With crude prices falling sharply by around $10/barrel, there can be some easing in the currency markets as the Dollar Index holds stable around 101. While the index may trade within 101.50-100.70 region for a while, Euro may attempt a slow rise towards 1.1450-1.15 while above 1.1370/1.14. USDJPY can dip to 162.70 before a slow rise towards 165 resumes. Aussie looks stable while Pound has scope to rise to 1.34/35 while above immediate support at 1.33. EURINR can trade within 109.5-110.50 while USDCNY can trade within 6.75-6.7850 for some time. USDINR could have scope to dip to 96.20-96.00 while below 97-96.75. The dip can come on the back of a decline in crude prices from levels above $100 to almost $90 now (Brent).
The US Treasury Yields have come down sharply. A strong fall in oil price after the news that the US-Iran peace talk can restart has dragged the yields lower. There is room to fall more to test their support. Thereafter a fresh rise is possible. The German Yields have dipped slightly. But supports are there to limit the downside and keep the broader uptrend intact. The 10Yr GoI is oscillating around 6.85%. It can rise and test its resistance first and then resume the downtrend.
Dow and DAX have bounced from key support and can remain within the 52000-53000 and 24700-25500 ranges respectively. Nifty has recovered from recent lows and can rise towards 24000-24100 in the near term. Nikkei has rebounded, but while below 66000, the downside towards 63000 remains intact. Shanghai has also recovered, but while below 3900, it remains vulnerable to a pullback towards 3750-3700.
Brent and WTI can decline further towards $85 and $80 respectively before entering a sideways phase. Gold continues to hold above the key $4000 support, keeping the broader $4000-$4200 range intact. Silver is likely to remain range-bound between $55 and $65. Copper has found support near $6.30 and can rise towards $6.50 if this level holds. Natural Gas remains range-bound within the $2.80-$3.00 range.
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Key highlightsEUR/USD started a fresh decline from the 1.1475 resistance zone.A bearish trend line is forming with resistance at 1.1405 on the 4-hour chart.EUR/USD technical analysisLooking at the 4-hour chart, the pair settled below 1.1420, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). The bears pushed the pair toward the 1.1365 support.
If there is an increase in bearish pressure, the pair could decline below 1.1350. The first major support could be near 1.1325. The main support might be 1.1300.
A downside break and close below 1.1300 might send the pair toward 1.1265. Any more losses could open the doors for a test of 1.1240. On the upside, the pair could face resistance near 1.1400. There is also a bearish trend line forming with resistance at 1.1405.
The next major resistance might be 1.1420 and the 100 simple moving average (red, 4-hour). A close above 1.1420 could start another steady increase. In the stated case, the bulls could aim for a move to 1.1450. Any more gains might open the doors for a test of 1.1475.
EUR/USD started a fresh decline from the 1.1475 resistance zone. A bearish trend line is forming with resistance at 1.1405 on the 4-hour chart. GBP/USD trimmed most gains and traded below 1.3400. WTI Crude Oil prices might attempt a move above $95.00. EUR/USD Technical Analysis The Euro failed to clear the 1.1475 hurdle against the US Dollar. EUR/USD started a fresh decline below 1.1450 and 1.1420.
Looking at the 4-hour chart, the pair settled below 1.1420, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). The bears pushed the pair toward the 1.1365 support.
If there is an increase in bearish pressure, the pair could decline below 1.1350. The first major support could be near 1.1325. The main support might be 1.1300.
A downside break and close below 1.1300 might send the pair toward 1.1265. Any more losses could open the doors for a test of 1.1240. On the upside, the pair could face resistance near 1.1400. There is also a bearish trend line forming with resistance at 1.1405.
The next major resistance might be 1.1420 and the 100 simple moving average (red, 4-hour). A close above 1.1420 could start another steady increase. In the stated case, the bulls could aim for a move to 1.1450. Any more gains might open the doors for a test of 1.1475.
Looking at WTI Crude Oil, the price seems to be following a bullish path, and the bulls could soon aim for a move above the $95.00 level.
Upcoming Key Economic Events:
German IFO Business Climate Index for July 2026 – Forecast 86.1, versus 85.6 previous. German IFO Current Assessment Index for July 2026 – Forecast 87.1, versus 87.0 previous. German IFO Expectations Index for July 2026 – Forecast 84.2, versus 84.1 previous. US Durable Goods Orders for June 2026 – Forecast +1.6% versus -4.5% previous.
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