EUR/USD Forecast: EUR corrects higher ahead of critical ECB decision

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0154

The European Central Bank will likely refrain from innovating with an unexpected announcement.
A better market mood weighed on the American currency at the beginning of the week.
EUR/USD has room to extend its corrective recovery in the upcoming days.

The EUR/USD pair holds on to substantial gains and trades in the 1.0160 price zone after hitting a daily high of 1.0200. The American dollar remained on the backfoot on Monday amid a better performance of stock markets. Investors remain concerned about looming recessions and overheated inflation, but at this point, it seems that policymakers would not do much more than what they have long ago anticipated.

This week, the European Central Bank will announce its monetary policy decision, already priced in as President Christine Lagarde has anticipated a 25 bps rate hike. The ECB is among the most conservative central banks, one of the reasons why EUR/USD pierced through parity last week.

On the data front, the week started in slow motion. The US published the July NAHB Housing Market Index, which contracted to 55 from 67 in June, while it will release May TIC Flows with Wall Street’s closing bell. On Tuesday, the EU will release the final June inflation figures, expected to be confirmed at 8.6% YoY. On the other hand, the US will release June Building Permits and Housing Starts.

EUR/USD short-term technical outlook

From a technical point of view, the daily chart shows that the pair is in a corrective advance that could continue in the upcoming sessions. Technical indicators maintain bullish slopes within negative levels but far below their recent lows in extreme oversold territory. However, the pair remains below bearish moving averages, with the 20 SMA heading firmly lower and providing dynamic resistance at around 1.0310.

The 4-hour chart shows that technical indicators reached overbought levels, with the Momentum consolidating nearby and the RSI retreating modestly. Meanwhile, the 20 SMA advances below the current level while the longer moving averages maintain their downward slopes well above the price.

Support levels: 1.0120 1.0070 1.0025

Resistance levels: 1.0185 1.0220 1.0265

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

AUD/USD remains depressed near 0.6950 after RBA minutes

AUD/USD attracts follow-through selling during Tuesday’s Asian session, looking to extend the overnight rejection slide from 0.7000, or a two-week top, following the release of RBA meeting Minutes. The US Dollar retains a bullish undertone near its highest level since April 2025 as energy-driven inflation risks keep December Fed rate hike bets firmly on the table. Adding to this, geopolitical risks further underpin the safe-haven USD.

USD/JPY extends retreat below 158.50 as intervention risks loom

USD/JPY is dropping below 158.50 in the Asian session on Tuesday, snapping a two-day winning streak and pulling back from an over two-week top touched the previous day, despite Japan's soft PPI inflation print. Bulls turn cautious amid speculation that authorities will step in to prop up the Japanese Yen, which, in turn, weighs on the pair.

Gold bulls seem hesitant below $4,200 as hawkish Fed offset USD weakness

Gold retains a mildly positive bias though it remains capped below the $4,200 mark and the top boundary of a two-week-old trading range. The US Dollar retreats from its highest level since April 2025 amid some profit-taking, offering support to the precious metal. However, the US Federal Reserve's hawkish stance and escalating Middle East conflicts could limit deeper losses for the safe-haven buck, keeping a lid on the commodity and warranting some caution for aggressive bulls.

Solana reclaims 50-day EMA amid tokenization expansion

Solana (SOL) trades above $107 on Tuesday, reclaiming the 50-day EMA after closing below it the previous day. Meanwhile, Solana’s tokenization expansion and the upcoming listing of Hong Kong’s second spot Solana Exchange Traded Fund highlight growing institutional interest.

Dollar corrects as markets watch bank earnings

The US Dollar remains broadly strong but is now correcting, with a possible retest of the breakout zone around 102 on the Dollar Index. Equity markets are showing a mixed picture: the S&P 500 and Nasdaq are weaker, while blue-chip indices such as the Dow Jones and DAX are moving higher.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?