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EUR/USD: Pressures on the Euro remain, 1.1400 level under challenge

The single European currency remains under mild pressure having touch 1,14 level and a downward breakdown is now very likely, leading the exchange rate to its lowest levels since July 2025. 

Although geopolitical tensions have eased with the expected agreement between the United States and Iran, which has had a direct impact on energy prices, the European currency has not reaped the benefits that many analysts expected, as the interest rate differential remains in favor of the American currency and the Fed's policy appears to remain aggressive until the end of the year.

At the same time, the energy shock of recent months, especially in the eurozone, appears to remain fresh, which has affected several economic activity indicators, creating the conditions for lower prices of the European currency.

At the same time, as high energy prices had predisposed to high inflationary pressures until the end of the year, recent developments have changed the bets and the likelihood of the European Central Bank continuing with further interest rate increases has been more limited.

The US currency has found itself gaining in such an environment with the chances of further gains being real and levels close to 1.12, although they seemed quite distant a few weeks earlier, are now on a possible agenda for the near future.

The market development fully justified my positions in previous articles as I was clearly in favor of the strategy of buying the US currency at peaks and preferably near the 1.20 levels, although this peak has only occurred once in recent months. 

It no longer makes sense to stay on such thoughts as the exchange rate has moved far away from the recommended levels for purchases of the US currency. On the contrary, a position in favor of the European currency near the level of 1,10 - 1.12 makes a sense as I believe that although the US currency is currently in the spotlight, it will hardly return to levels much below 1.10.

Author

Vasilis Tsaprounis

Vasilis Tsaprounis

Independent Analyst

Vassilis Tsaprounis possesses over 25 years of professional experience in Capital Markets and especially in the foreign exchange market.

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