Euro treads water near two-month lows ahead of the ECB decision

EUR/USD holds losses below 1.1550, just above two-month lows in the 1.1500 area.
The ECB is widely expected to hike interest rates, but a dovish statement might hurt the Euro
Growing tensions in the Middle East and hot US inflation data are supporting the US Dollar.

Guillermo Alcala FXStreet

The Euro (EUR) has given away previous gains against the US Dollar (USD) on Thursday and is trading at 1.1535 at the time of writing, practically unchanged in daily charts with the two-month lows, near 1.1500, at hand. Fresh US strikes on Iran have crushed risk appetite, while market expectations that the European Central Bank (ECB) will hike rates later on the day keep the Euro afloat.

The ECB concludes its two-day monetary policy meeting later in the day, and a 25-basis-point rate hike is practically written in stone. Investors, thus, will be more attentive to President Christine Lagarde's press release, looking for hints about the bank's forward guidance. In that sense, a lack of commitment to further monetary tightening might be seen as a dovish message and trigger further Euro weakness.

Market sentiment, meanwhile, remains somber, following a new exchange of attacks between the US and Iran, and US President Donald Trump's threat of further strikes if Tehran fails to sign a deal. CNN News, citing diplomatic sources, reported that peace negotiations remain on track, although the traders need more certainty to shrug off the risk-off mood.

In the US, on Wednesday, Consumer Price Index (CPI) figures confirmed that inflation accelerated to a 4.2% year-over-year pace in May. This is the highest level in more than three years and more than twice the Federal Reserve’s (Fed) 2% target, which boosts expectations of Fed rate hikes later this year and provides additional support to the USD.

Technical Analysis: Euro remains vulnerable near 1.1500

EUR/USD is wavering without a clear bias within a broader bearish trend and following a modest recovery from recent lows. Indicators on intraday charts are mixed. The 4-hour Relative Strength Index (RSI) shows subdued bullish pressure at levels below 50, while the slightly positive Moving Average Convergence Divergence (MACD) hints at a tentative attempt to stabilize rather than a decisive bullish reversal.

Resistance at the 1.1580 previous support area (May 21 low) is capping upside attempts and closing the path towards the June 4 and 5 highs, around 1.1645, and the late-May highs, at 1.1685.

On the downside, a confirmation below Monday's low, at the 1.1500 area, would give fresh hope for bears and expose the March 30 low, at 1.1443. Further down, the year-to-date low, at 1.1411 (March 13 low), will come into focus.

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

Economic Indicator

ECB Rate On Deposit Facility

One of the European Central Bank's three key interest rates, the rate on the deposit facility, is the rate at which banks earn interest when they deposit funds with the ECB. It is announced by the European Central Bank at each of its eight scheduled annual meetings.

Economic Indicator

ECB Press Conference

Following the European Central Bank’s (ECB) economic policy decision, the ECB President gives a press conference regarding monetary policy. The president’s comments may influence the volatility of the Euro (EUR) and determine a short-term positive or negative trend. If the president adopts a hawkish tone it is considered bullish for the EUR, whereas if the tone is dovish the result is usually bearish for the Euro.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.