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EUR/USD ahead of a key week: Holding near lows

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

Chart

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.

Chart

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.

Author

RoboForex Analysis Department

RoboForex Analysis Department provides timely market insights, expert technical analysis, and actionable forecasts across forex, commodities, indices, and equities.

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