EUR/USD Price Forecast: Sees more downside towards 1.1500 following Double Top breakdown

EUR/USD holds onto losses near two-month low of 1.1596 ahead of FOMC minutes.
The US Dollar trades firmly due to multiple tailwinds.
US Treasury Yields surge further as the Fed is unlikely to cut interest rates this year.

Sagar Dua FXStreet

The EUR/USD pair trades vulnerably near the two-month low of 1.1596, posted on Tuesday, during the Asian trading session on Wednesday. The major currency pair faces selling pressure as the US Dollar (USD) trades firmly due to the combined efforts of the risk-aversion market theme and rising United States (US) Treasury Yields.

During the press time, S&P 500 futures extend their Tuesday losses to near 7,340, reflecting a risk-off market mood. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades close to its six-week high at 99.43.

Market sentiment turns risk-off amid fears that the war in the Middle East could resume if Iran doesn’t reach a deal with the US. On Tuesday, US President Donald Trump threatened to resume attacks on Iran in “two or three days” as part of the push for a deal to end the war, after he said he had just called off a US attack, Bloomberg reported.

Meanwhile, 10-year US Treasury Yields have posted a fresh over-a-year high at 4.91% as traders have priced out the possibility of interest rate cuts by the Federal Reserve (Fed) this year.

Going forward, investors will focus on the Federal Open Market Committee (FOMC) minutes of the April policy meeting and the Eurozone/US preliminary private sector PMI data for May.

EUR/USD technical analysis

EUR/USD trades lower at around 1.1596 as of writing. The pair demonstrates a bearish near-term tone as spot holds below the 20-day exponential moving average (EMA) at 1.1684. The pair’s failure to stay above this dynamic barrier suggests rallies are still being sold amid a Double Top breakdown below 1.1660.

The Relative Strength Index (RSI) near 40 hints at lingering downside momentum rather than an imminent reversal.

On the topside, the 20-day EMA at 1.1684 is the first resistance that bulls would need to reclaim to ease immediate selling pressure and open the door to a deeper corrective bounce towards the May 13 high at 1.1742.

Looking down, the pair could slide further toward 1.1500 if it fails to hold the immediate cushion at 1.1592

(The technical analysis of this story was written with the help of an AI tool.)

US Dollar FAQs

What is the US Dollar?

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

How do the decisions of the Federal Reserve impact the US Dollar?

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

What is Quantitative Easing and how does it influence the US Dollar?

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

What is Quantitative Tightening and how does it influence the US Dollar?

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

AUD/USD bulls regain control above 0.6950 amid USD retreat

AUD/USD regains traction and extends the previous day's bounce from the weekly low, aiming for 0.7000 in Asia on Friday. The overnight pullback in US bond yields keeps the US Dollar below an 18-month high, which in turn offers some support to the pair. Meanwhile, hawkish RBA expectations also keep the major underpinned.

USD/JPY holds gains near 158.00 after Japan's weak Household Spending data

USD/JPY clings to gains around 158.00 after data showed on Friday that Japan's Household Spending fell for the ninth straight month, undermining the Japanese Yen. Meanwhile, the US Dollar remains depressed as the overnight fall in US bond yields counters a hawkish Fed and geopolitical uncertainties, could cap any downside in the pair.

Gold retakes $4,200 amid pre-US CPI repositioning

Gold holds firm, revisiting $4,200 on Friday, extending recovery from two-month lows. US Dollar eases in tandem with Oil prices and Treasury yields, awaiting US sentiment data. The tide seems to be turning in favor of Gold, but the daily RSI is still bearish.

Starknet rally tests key breakout amid proposed Layer-1 transition

Starknet (STRK) is up 16% so far on Friday, advancing its steady recovery of nearly 200% since mid-August. The rally aligns with the rising demand for financial anonymity in the cryptocurrency market and the CEO of StarkWare, Eli Ben-Sasson’s proposed transition of Starknet to Layer-1 to achieve quantum security by 2027.

The inflation illusion: How government formulas shape the data

Every month, the government releases a barrage of economic statistics. Employment, inflation, consumer spending, economic growth, and countless other measurements are presented as objective facts that policymakers, investors, and the public can use to understand the economy. But what happens when the methodology used to produce those numbers changes?

The UK 30-year gilt just hit a 1998 high. Is that good or bad for the British Pound?

The yield on the UK's 30-year government bond, or gilt, went through 6% on October 1 for the first time since early 1998, and on Monday the Pound was at its strongest against the Euro since June 2025. The gilt market's 28-year high is mostly someone else's. Since early May, the 30-year gilt yield has risen about 0.15 of a percentage point and the US 30-year about 0.7.