EUR/USD loses ground as market sentiment favours the US Dollar

EUR/USD fell on Friday to its lowest level since 31 March 2026 and is holding near 1.1457. The US dollar is being supported by rapidly growing expectations of further Federal Reserve policy tightening following more hawkish-than-expected signals from the regulator.

This week, the Fed left interest rates unchanged. However, the updated forecasts showed that half of FOMC members still see at least one rate hike as possible in the future. At the same time, the regulator raised its inflation projections, taking into account the impact of the recent conflict in the Middle East.

New Fed Chair Kevin Warsh did not provide the market with clear guidance on the next interest rate decision. However, he confirmed that bringing inflation back to the target level remains the US central bank’s priority.

Meanwhile, the interim peace agreement between the US and Iran has officially come into force. This helped reduce geopolitical tensions and pushed oil prices lower.

However, the market continues to focus more on the outlook for the Fed’s monetary policy than on the improved foreign policy backdrop. This is providing strong support for demand for the US dollar.

EUR/USD technical analysis

On the H4 chart of EUR/USD, the market formed a consolidation range around 1.1467 today. At the moment, the range has expanded downwards to 1.1417 and upwards to 1.1450. If the price breaks out of this range to the upside, a corrective wave towards 1.1590 is expected. After that, a decline to 1.1385 may follow. If the price breaks out directly to the downside, the potential will open for a downward wave towards 1.1313. Technically, this scenario is confirmed by the MACD indicator: its signal line is below zero and directed firmly downwards, reflecting the persisting bearish momentum and the potential for the downtrend to continue.

On the H1 chart, the market has completed the structure of another growth wave towards 1.1480. At the moment, a consolidation range is forming below this level. Today, the relevant scenario suggests a possible expansion of the range downwards to 1.1414 and upwards to 1.1444, followed by a decline to 1.1385. Technically, this scenario is confirmed by the Stochastic oscillator: its signal line is below 20. A rise towards 50 is expected, followed by a firm downward move back towards 20.