EUR/USD Price Forecast: Buyers retain control despite mounting risk aversion

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1578

The escalation of the Middle East conflict likely to keep markets in risk-off mode.
European Central Bank officials keep hinting at a pause in interest rate cuts.
EUR/USD poised to extend its advance, waiting for a clearer catalyst.

The EUR/USD pair advances on Monday, approaching the 1.1600 threshold early in the American session. The US Dollar (USD) started the week with a firmer tone, gaping higher against most major rivals, amid the Middle East conflict. Iran and Israel kept exchanging airstrikes throughout the weekend, with civil casualties accumulating on both sides.

USD safe-haven demand, however, was short-lived. The Greenback resumed its decline during European trading hours, retaining its soft tone during American trading hours.

Meanwhile, the Eurozone (EU) calendar remained scarce, although a couple of European Central Bank (ECB) officials were on the wires. Bundesbank President Joachim Nagel noted the ECB achieved its goal, but added policymakers “must” retain full optionality on interest rates, adding that uncertainty is high enough for the ECB to contribute to increasing it.

Across the pond, the US published the NY Empire State Manufacturing Index for June, which fell to -16 from the -9.2 posted in May. The reading also missed the expected improvement to -5.5.

The macroeconomic calendar will become more interesting in the upcoming days, as Germany will release the June ZEW survey on Economic Sentiment, while the US will publish May Retail Sales

EUR/USD short-term technical outlook

The EUR/USD pair is up on a daily basis, although posting a third consecutive lower high on a daily basis. The same chart shows the pair keeps developing far above all its moving averages, with the 20 Simple Moving Average (SMA) accelerating north and currently at around 1.1400. At the same time, technical indicators resumed their advances within positive levels, with the Relative Strength Index (RSI) indicator approaching overbought readings. Overall, EUR/USD is poised to extend its advance.

The near-term picture shows the risk skews to the upside, although the momentum is limited. The pair found intraday buyers around a bullish 20 SMA, providing dynamic support at around 1.1530. The 100 and 200 SMAs, in the meantime, offer neutral-to-bullish slopes far below the shorter one. Finally, technical indicators hold well above their midlines, yet without clear directional strength.

Support levels: 1.1530 1.1490 1.1440

Resistance levels: 1.1600 1.1640 1.1685

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 consolidates gains just above 0.7000

AUD/USD rebounds sharply and manages to reclaim the area beyond the 0.7000 threshold on Wednesday. Indeed, the pair sets aside two daily drops in a row and regains balance on the back of the marked pullback in the Greenback as investors keep assessing the results from the US Midterms elections.

USD/JPY declines below 158.00 as USD weakens on midterm election results

USD/JPY comes under heavy selling pressure on Wednesday, dropping below 158.00 during the Asian session as the US Dollar slumps to a one-month low amid heightened political uncertainty after early US midterm vote counts. Moreover, the prospect of gridlock in Washington drives safe-haven flows, triggering a fresh leg down in US bond yields and further weighing on the buck.

Gold pops to four-day highs near $4,050

Gold manages to regain some composure, leaving behind two consecutive daily pullbacks and reclaiming the area above the key $4,000 mark per troy ounce on Wednesday. The strong decline in the US Dollar, shrinking US Treasury yields across the curve and lower crude oil price all contributes to the yellow metal’s recovery.

Bitcoin and Gold Outlook: BTC tops $80K, XAU reclaims $4,000 as Democrats take control of Congress

Bitcoin (BTC) and Gold (XAU/USD) are gaining momentum on Wednesday, as bulls stage a comeback. BTC’s position above $80,000 signals a bullish turnaround, erasing sharp losses from the Binance hack, which impacted $6.3 billion. Meanwhile, Gold’s recovery above $4,000 could strengthen bullish sentiment after the United States (US) midterm elections.

US midterms 2026: Investor Q&A on the Democratic sweep

1. Gridlock replaces the stimulus narrative. A Democratic Congress would constrain Trump's ability to pursue additional fiscal expansion and legislative tax measures. But it cannot simply reverse the president's entire economic agenda. Executive powers, existing legislation and presidential vetoes remain important. 2. AI faces a higher hurdle, not an extinction event.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.