• EUR/USD picked up extra pace and surpassed 1.0800.
  • The FOMC Minutes said rate hikes are on the table if inflation increases.
  • Markets will now shift their attention to Friday’s NFP.

A marked decline in the US Dollar (USD) caused the USD Index (DXY) to revisit the 105.00 neighbourhood amidst the ongoing multi-session bearish move in the currency.

This strong downtick in the Greenback also kept the bid bias around EUR/USD well in place, lifting spot back above the key 1.0800 barrier as the likelihood of interest rate cuts by the Fed as soon as September gathered renewed impulse in response to dispiriting results from the US docket, especially from the labour market.

Collaborating with the better tone in the pair, market participants continued to assess the latest comments from ECB President Christine Lagarde at the ECB Forum on Tuesday, who emphasized that the euro zone has made significant progress towards disinflation, though economic growth uncertainties persist. At the same event, Chief Jerome Powell indicated that the Fed needs more data before considering rate cuts, aiming to verify if recent low inflation readings reflect sustained price pressures.

Overall, the macroeconomic situation remained stable on both sides of the Atlantic as the European Central Bank (ECB) is considering further rate cuts beyond the summer, with markets expecting two more cuts this year.

In contrast, there is still debate among market participants about whether the Federal Reserve (Fed) will implement one or two rate cuts this year, despite the Fed projecting just one cut, likely in December.

In what was the salient event of the session, the FOMC Minutes said that participants voted to keep the policy rate in the 5.25%–5.50% range. They recognised that progress in lowering inflation has been slower this year than they had anticipated in December. Furthermore, some participants emphasised the significance of patience before considering rate reduction, while others noted the potential need to hike rates again if inflation recovered. In addition to leaving interest rates constant, officials during the June meeting postponed the expected start of rate decreases. On this, new projections indicated that Fed officials, at the median, predicted only one quarter-point rate decrease this year vs. three cuts expected at the March 19-20 gathering.

According to the CME Group's FedWatch Tool, there is about a 73% probability of lower interest rates in September, compared to nearly a 95% chance at the December 18 meeting.

In the short term, the recent ECB rate cut, contrasted with the Fed's decision to maintain rates, has widened the policy gap between the two central banks, potentially leading to further weakness in EUR/USD.

However, the Eurozone's emerging economic recovery and the perceived weakening of US fundamentals are expected to narrow this disparity, possibly providing occasional support for the pair in the near future.

Politically, the next risk event for the euro is the upcoming second round of the French snap elections on July 7.

EUR/USD daily chart

EUR/USD short-term technical outlook

Further upside could see EUR/USD revisit the July high of 1.0816 (July 3), before the weekly top of 1.0852 (June 12) and the June peak of 1.0916 (June 4). The breakout of this level might bring the March high of 1.0981 (March 8) back on the radar, ahead of the weekly top of 1.0998 (January 11) and the psychological 1.1000 threshold.

If bears regain control, the pair may hit its June low of 1.0666 (June 26), then the May low of 1.0649 (May 1), and finally the 2024 bottom of 1.0601 (April 16).

So far, the 4-hour chart indicates a resurgence of the upside impetus. The initial resistance level is 1.0816, then 1.0852. The immediate support is at 1.0666, prior to 1.0649 and then 1.0601. The Relative Strength Index (RSI) increased to about 63.

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

EUR/USD remains below 1.1000 on Powell's remarks

EUR/USD remains below 1.1000 on Powell's remarks

The US Dollar's recovery has gained momentum, pushing EUR/USD down to sub-1.1000 levels—the daily lows—following Fed Chair Jerome Powell's "Economic Outlook" speech.

EUR/USD News
GBP/USD loses the grip and approaches 1.2900

GBP/USD loses the grip and approaches 1.2900

GBP/USD is shedding some of its weekly gains and retreating back to around the 1.2900 level, as the Greenback continues its recovery following Chair Powell's comments.

GBP/USD News
Gold remains offered, looks at $3,000

Gold remains offered, looks at $3,000

Gold prices are deepening their daily retreat, edging closer to the crucial $3,000 per troy ounce level as the US Dollar strengthens, all while investors digest Fed Chair Powell's speech.

Gold News
Can Maker break $1,450 hurdle as whales launch buying spree?

Can Maker break $1,450 hurdle as whales launch buying spree?

Maker holds steadily above $1,250 support as a whale scoops $1.21 million worth of MKR. Addresses with a 100k to 1 million MKR balance now account for 24.27% of Maker’s total supply. Maker battles a bear flag pattern as bulls gather for an epic weekend move.

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