|

EUR/USD stays on the bear’s radar around 1.0500, ECB’s Lagarde, Fed’s Powell eyed

  • EUR/USD remains pressured towards yearly low after three-week downtrend.
  • Hawkish Fedspeak, Fed’s 75 bp rate hike joins recession fears to underpin US dollar.
  • ECB fails to impress bulls despite teasing rate hikes.
  • Lagarde’s testimony eyed for fresh intraday clues amid light calendar.

EUR/USD begins the new trading week by extending Friday’s retreat from 1.0500, staying pressured by the press time after three consecutive weekly falls. The major currency pair bears the burden of the market’s rush towards the haven, which in turn joins hawkish Fed bets to favor the US dollar.

US Dollar Index (DXY) manages to post a three-week uptrend despite falling around the Fed’s surprise interest rate lift by 75 basis points (bps). The greenback’s following gain could be linked to the broad chatters of a 1.0% rate hike and hawkish Fed policymakers. However, talks of the US economic slowdown seemed to have probed the greenback bulls.

On Friday, US Industrial Production for May dropped to 0.2% MoM, below 0.4% market forecast and 1.4% prior. The details suggested steady Capacity Utilization and a contraction in the manufacturing output. While the US data were softer, the Federal Reserve’s (Fed) bi-annual Monetary Policy mentioned the Gross Domestic Product (GDP) appears to be on track to rise moderately in the second quarter, per Reuters.

Considering the data, Fedspeakers were more confident over their latest vote for a 0.75% rate hike. Among them was Minneapolis Fed President Niel Kashkari who backed another 75 bps rate hike in July.

On the other hand, the Eurozone’s final prints of May CPI confirmed 8.1% YoY and 3.8% MoM figures but the policymakers were a bit hawkish. That said, European Central Bank’s (ECB) policymaker Klaas Knot said, per Reuters, that the ECB could opt for several 50 bps rate hikes in case the inflation situation in the euro area were to worsen.

It’s worth noting that the receding covid fears in China and chatters surrounding the US readiness for easing China tariffs are some positives favoring the risk appetite despite major negatives that keep the US dollar on the bull’s radar. Additionally, French President Emmanuel Macron's losing of absolute majority while winning 245 seats out of 577 in legislative elections could also weigh on the EUR/USD prices.

Amid these plays, the US equities marked an unconvincing relief rally. It’s worth noting that today’s testimony by ECB President Christine Lagarde and Wednesday’s Testimony from Fed Chairman Jerome Powell are the week’s key events to watch for clear directions.

Technical analysis

EUR/USD pair’s pullback from a six-week-old horizontal support area surrounding 1.0630 keeps directing it to the yearly low surrounding 1.0350. That said, the 10-DMA level of 1.0510 restricts immediate upside.

Additional important levels

Overview
Today last price1.0485
Today Daily Change-0.0017
Today Daily Change %-0.16%
Today daily open1.0502
 
Trends
Daily SMA201.0638
Daily SMA501.0635
Daily SMA1001.0888
Daily SMA2001.117
 
Levels
Previous Daily High1.0561
Previous Daily Low1.0445
Previous Weekly High1.0601
Previous Weekly Low1.0359
Previous Monthly High1.0787
Previous Monthly Low1.035
Daily Fibonacci 38.2%1.0489
Daily Fibonacci 61.8%1.0517
Daily Pivot Point S11.0444
Daily Pivot Point S21.0386
Daily Pivot Point S31.0327
Daily Pivot Point R11.056
Daily Pivot Point R21.0619
Daily Pivot Point R31.0677

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
Share:

Editor's Picks

AUD/USD flatlines near 0.6965 as less hawkish RBA counters USD weakness

AUD/USD holds steady above a two-week low, trading near 0.6965 in the Asian session on Wednesday as early midterm election results heighten political uncertainty and weigh heavily on the US Dollar. Moreover, reviving safe-haven demand triggers a fresh leg down in US bond yields, offsetting Fed hike bets and exerting additional pressure on the buck. However, a less hawkish RBA caps the Aussie.

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.

Crypto Today: Bitcoin, Ethereum, XRP extend advance as US Dollar slides on Democrats' US midterm victory

Bitcoin trades above $78,000 on Wednesday as risk-on sentiment improves in the broader cryptocurrency market. Ethereum mirrors BTC’s recovery outlook, hovering above $2,300. Ripple similarly exchanges hands above $1.28, marking two consecutive days of gains.

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.