The euro (EUR) continued its downward trend against the dollar (USD) on Friday, slipping below 1.1650 for the first time since early April. This puts it on track for a weekly drop of about 1.2%. Various factors are creating a challenging environment for the euro, including a cautious market sentiment, rising U.S. Treasury yields due to anticipated interest rate hikes from the Federal Reserve, and West Texas Intermediate (WTI) oil prices remaining above $100.
This week, the dollar performed better than other currencies, supported by a standstill in the U.S.-Iran conflict and rising inflation concerns in the U.S. These factors are fueling speculation that the Fed might increase rates sometime in the latter half of 2026. Additionally, the stalled peace negotiations with Iran have led to WTI oil prices surpassing the significant $100 mark, putting extra stress on euro zone economies that rely on oil imports.
Technical analysis: Euro breaks through significant support at 1.1645
On Friday, the EUR/USD pair faced significant bearish pressure, following a decline over the past four trading days. The 4-hour Relative Strength Index (RSI) indicates that it’s currently in oversold territory, suggesting that the downward momentum is maintaining strength under bear control. The Moving Average Convergence Divergence (MACD) in the same time frame remains negative, pointing to ongoing selling pressure.
Support has emerged in the previous resistance zone around 1.1620, although the market might consolidate given the oversold conditions. Still, vulnerability persists while the euro is below 1.1645. There isn’t clear support until it approaches the early April lows, just over 1.1500.
On the flip side, any bullish rebound could meet resistance near the highs from Thursday at 1.1720. Further upside resistance is at the upper limit of its trading range for the past three weeks, around 1.1795, followed by the April peak at 1.1850, which could serve as the next target.
