EUR/USD sinks towards fresh lows on hawkish rate hold decision

EUR/USD dropped sharply after Fed’s held rate at 3.75% and adopted a hawkish outlook.
Broader markets reacted with Gold, Oil, and Stocks coming under pressure.
Technical Outlook on EURUSD remains bearish following break out from support.

Erastus Adegbotolu TradingPRO

The Euro has plunged against the US dollar after the Federal Reserve accompanied its rate hold with a hawkish stance on its projections. The new Fed Chair Kevin Warsh who debuted his first conference surprised the markets when he mentioned that rates will remain unchanged at 3.75% with a rate cut off the table after citing upside inflation risks. In addition to that, the Fed projected it’s rates for 2026 to 3.8%, sparking the possibility of a hike in the future. Reacting to the news, the EURUSD fell to fresh lows exiting the 1.1500 price handle as it looks towards the low of March 2026.

In other markets, Gold prices erased some of its gains from the US/Iran deal and could be set for more downside moves as risk-off trades weigh on the market. Oil prices have continued to dip as optimism around the US/Iran deal continues to gain momentum. As of writing, the Brent has dropped over -0.80% to $78. Stocks were not exempted from the recent sell-off with the NASDAQ100 and the SP500 both falling further away from their record highs.

Technical outlook

The Federal Reserve’s supportive policy for the USD means we should expect more decline on the EURUSD in the near-term. However, some technical levels could invite the opportunity for short-term longs.

Bearish scenario

The chart presents a strong bearish structure with the price now breaking below the support at 1.1509 after multiple tests. The descending trendline which has remained intact since May 2026 also suggests that sellers are firmly in control. Traders interested in joining the current trend should anticipate a pullback towards the turncoat resistance at 1.1509. Failure to reject from the resistance area will expose the descening trendline which could offer another opportunity to go short.

Bullish scenario

The current situation is quite difficult for buyers, given the current fundamentals driving the market. For the bulls to turn the situation to their favour, the price must not only rebound at 1.1450 support but must aim to close above the 1.1509 resistance before moving to break the descending trendline that has prevented further price appreciation. Traders interested in buying should not mistake the rebound for a reversal as the move could serve as a pullback for further dumps. Key levels to watch for possible longs are 1.1450 and 1.1415. Failure for price to hold around these levels could see the price drift towrds 1.1400 psychological level.

Author

Erastus Adegbotolu

TradingPRO

Forex market analyst and educator with a strong focus on technical analysis and trader psychology.

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