• EUR/USD met some selling pressure around 1.0920.
  • The US Dollar showed some signs of life on Monday.
  • Next on tap are US Retail Sales, and the ECB event.

The US Dollar (USD) regained some composure in a mildly optimistic start to the week, pushing the USD Index (DXY) to the low-104.00s against the backdrop of a generalized knee-jerk in the risk-linked universe.

The modest advance in the Greenback dragged EUR/USD back below 1.0900 soon after spot hit new monthly peaks around 1.0920, all amidst marginal moves in the US and German money markets.

In the meantime, there was no news from Chief Powell, after he argued that he does not anticipate major economic turbulence or recession in the US economy, stating that a hard landing scenario is not the most likely. He also noted that progress is being made towards bringing price increases back to the Fed's target.

Meanwhile, the CME Group's FedWatch Tool fully priced in lower rates at the September 18 meeting.

Meanwhile, the macroeconomic landscape remained stable on both sides of the Atlantic. Consensus among investors expects the European Central Bank (ECB) to maintain its policy rate unchanged at its July 18 gathering, although markets continued to see two additional cuts by year-end.

On the other hand, investors continue to debate whether the Fed will implement one or two (or three) rate cuts this year, despite the Fed's current projection of a single cut, likely in December.

The ECB's rate cut in June, along with the Fed's decision to maintain rates, has widened the policy divergence between the two central banks, potentially leading to further weakening of EUR/USD in the short term. However, economic recovery prospects in the Eurozone, combined with signs of cooling in key US economic indicators, may mitigate this disparity and occasionally support the pair in the near future.

Looking ahead, US Retail Sales could shed extra light on the Fed’s plans to reduce its interest rates, while the Economic Sentiment in Germany and the euro area are expected to take centre stage on the domestic calendar on Tuesday.

EUR/USD daily chart

EUR/USD short-term technical outlook

EUR/USD is likely to reach the next upward hurdle at the July top of 1.0922 (July 15), followed by the March peak of 1.0981 (March 8) and the psychological 1.1000 barrier.

If bears gain control, spot might approach the 200-day SMA at 1.0805 before falling to a low of 1.0666 on June 26. From here, the May low of 1.0649 (May 1) leads to the 2024 bottom of 1.0601 (April 16).

Looking at the big picture, it appears that further gains are on the way if the key 200-day SMA is consistently surpassed.

So far, the 4-hour chart shows an increase in the positive momentum. The initial resistance level is 1.0922, ahead of 1.0981. On the flip side, the 55-SMA at 1.0832 is first, followed by the 200-SMA at 1.0786 and, finally, 1.0709. The relative strength index (RSI) has fallen below 66.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD retakes 0.6000 on the road to recovery amid US-China trade war

AUD/USD retakes 0.6000 on the road to recovery amid US-China trade war

AUD/USD is off the five-year low but remains heavy near 0.6000 in the Asian session on Monday. The pair continues to suffer from a US-China trade war as US President Trump said that he would not do a deal with China until the US trade deficit was sorted out. 

AUD/USD News
USD/JPY attempts tepid recovery above 146.00

USD/JPY attempts tepid recovery above 146.00

USD/JPY kicks off the new week on a weaker note, though it manages to stage a tepid recovery above 146.00 early Monday. The global carnage, amid the mounting risk of a recession and a trade war led by Trump's sweeping tariffs, keeps the safe-haven Japanese Yen underpinned at the expense of the US Dollar.

USD/JPY News
Gold holds the bounce above $3,000 amid Asia risk-off profile

Gold holds the bounce above $3,000 amid Asia risk-off profile

Gold price recovers ground above $3,000 in the Asian session on Monday. The global market turmoil extends and hence, Gold  buyers manage to find their feet as trade war and recession risks escalate and revive the haven demand for the yellow metal after Friday's 'sell everything' mode. 

Gold News
Bitcoin could be the winner in the ongoing trade war after showing signs of decoupling from stocks

Bitcoin could be the winner in the ongoing trade war after showing signs of decoupling from stocks

Bitcoin traded above $84,000 on Friday, showing strength despite the stock market experiencing significant declines. The market reaction stems from United States President Donald Trump's clash with the Federal Reserve Chairman Jerome Powell over interest rate decisions.

Read more
Strategic implications of “Liberation Day”

Strategic implications of “Liberation Day”

Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Majors

Cryptocurrencies

Signatures

Best Brokers of 2025