Bearish Outlook
- Consider selling EUR/USD pairs, with a take profit target set at 1.1300.
- Implement a stop loss at 1.1630.
- Expected timeframe: 1-2 days.
Strong Outlook
- Consider buying the EUR/USD pair, aiming for a take profit at 1.1630.
- Set a stop loss at 1.1300.
The EUR/USD exchange rate has been relatively stable after the Federal Reserve’s recent interest rate decision. It dropped from a peak of 1.1631 last week to around 1.1512 currently.
Federal Reserve’s Interest Rate Decision
After the Federal Reserve’s announcement, the EUR/USD pair remained mostly unchanged. The bank decided to keep interest rates steady between 4.25% and 4.50% during its fourth meeting.
Many Federal Reserve officials suggest that there might be two rate cuts later this year, with expectations for action possibly in the September meeting.
In terms of economic growth, Fed officials indicated an anticipated rise of only 1.4% in 2025, which is noticeably lower than last year’s figures. The unemployment rate might increase from the current 4.2% to about 4.5% by year’s end.
Furthermore, consumer inflation is projected to rise to 3%, up from 2.4% in May, with the bank aiming for a target above 2.0%. Rising inflation has been attributed, in part, to Donald Trump’s tariffs and ongoing unrest in the Middle East.
The escalating tensions in the Middle East have driven crude oil prices significantly higher, with Brent and West Texas Intermediate (WTI) surpassing $70.
Following the release of EuroStat’s latest inflation report, the EUR/USD rates experienced some volatility. The consumer price index showed a decrease from 2.2% in April to 1.9% in May. Meanwhile, core CPI shifted from 2.7% to 2.3%, excluding the more variable food and energy prices.
Looking forward, a key event for the EUR/USD pair will be an upcoming speech by Christine Lagarde, the Head of the European Central Bank.
EUR/USD Technical Analysis
The EUR/USD rate has adjusted down from a peak of 1.1631 to around 1.1500 now, breaching critical support levels recorded at 1.1573 back on April 21.
While the pair is above the 50-day and 100-day Exponential Moving Averages (EMA) — which is a bullish signal — it has also formed a double-top pattern with a neckline at 1.1062, recorded on May 12.
This suggests the possibility of further declines, especially if sellers target the 50-day moving average at 1.1300. A movement beyond the resistance at 1.1630 could invalidate the bearish sentiment.
