EURUSD has nudged up, but the rebound is fragile

EUR/USD maintains modest weekly gains; however, it is premature to conclude that the euro-led consolidation phase has ended. The recent rebound followed improved U.S.–Iran geopolitical sentiment, which sparked a broader risk-on rally. Since then, the currency pair has been consolidating sideways over the past several trading hours. Currently, EUR/USD hovers near the 1.1600 level and exhibits signs of indecision during the European session, oscillating between minor gains and losses without a clear directional move.

EUR/USD Fundamental Analysis

The euro showed limited reaction to the latest Eurozone inflation figures, indicating that market attention is primarily focused on the upcoming FOMC meeting and geopolitical developments. Eurozone CPI inflation remained steady at 3.2% in May, marking the highest level since September 2023 and significantly above the European Central Bank’s 2.0% target.

For the remainder of the week, investors will largely concentrate on the FOMC rate decision and speeches from ECB policymakers. Additionally, geopolitical developments and overall market risk sentiment are expected to influence euro price movements. Against the backdrop of the anticipated FOMC announcement and ongoing geopolitical uncertainty, the EUR/USD pair may face downward pressure later this week. Specifically, a hawkish pause from the Fed could result in further euro depreciation against the U.S. dollar.

EUR/USD Technical Outlook

From a technical perspective, momentum has remained neutral to slightly bullish in recent sessions, with the pair confined to a range-bound movement due to mixed data and a lack of clear direction. If the rebound continues, the next immediate resistance level is identified at 1.1640. However, if the pair fails to sustain upward momentum, this could present an opportunity to take profits on long positions. Consequently, a pullback toward the 1.1540–1.1500 range may occur if bullish momentum does not extend.

Summary

The euro is attempting to strengthen against the U.S. dollar but faces challenges despite signs of short-term weakness in the greenback. Technically, the short-term trend remains supportive; however, if the U.S. dollar regains strength in the coming days, a sharp pullback in the euro may ensue.

 

Warning! This material is not intended as investment advice. Past performance data does not guarantee future returns. Investing in foreign currencies may affect your returns due to their fluctuations. Any transaction in securities may result in both profits and losses. The assumptions and expectations set forth in this material are only estimates that may not be accurate and may change depending on current economic conditions. These statements do not guarantee future returns.