What to Know

  • EUR/USD rose to its highest level since June 17 after Donald Trump delayed planned attacks against Iran.
  • The pair also reacted positively after the Federal Reserve left interest rates unchanged between 3.50% and 3.75%.
  • Three Federal Reserve officials voted to hike interest rates, reflecting lingering concern around elevated inflation.
  • The latest US Personal Consumption Expenditures Price Index showed PCE rising 3.7% in the 12 months through June, down from 4.1% in May.
  • The move lower in oil prices during June was linked to the US-Iran Memorandum of Understanding, but there is a risk that inflation could tick higher after gasoline prices moved above $4 in July.
  • EUR/USD has rebounded from 1.1350 to 1.1530 after forming a double-bottom pattern on the daily chart.
  • The pair moved above the key 1.1483 neckline and the 50-day Exponential Moving Average, strengthening the bullish technical case.
  • The Relative Strength Index climbed to 62, its highest level since April.
  • Some technical traders see scope for EUR/USD to move toward 1.1622, while a bearish scenario would focus on a retreat toward 1.1450.
  • Upcoming US and European manufacturing PMI figures and the US nonfarm payrolls report are the next major catalysts.

Euro Gains as Geopolitical Risk Eases

EUR/USD advanced as currency traders reassessed geopolitical risk, Federal Reserve policy, and incoming US inflation data. The pair rose to its highest level since June 17 after Donald Trump delayed planned attacks against Iranian infrastructure, citing interventions by Iran and other Middle East countries. The decision helped cool concerns that a broader regional confrontation could disrupt energy markets and intensify inflation pressure through higher oil prices.

The euro’s move against the US dollar reflected a combination of risk relief and technical momentum. Before the pause, Trump had threatened a major operation targeting Iranian infrastructure. Iran had also threatened to strike key targets in the region, including infrastructure projects such as desalination and power plants. Market participants had viewed that scenario as a potential driver of higher oil prices, which could have complicated the inflation outlook and supported a more defensive tone in global markets.

Instead, oil prices continued their strong downward trend as traders responded to the reduced immediate threat of escalation. For EUR/USD, the easing of geopolitical stress came at a moment when the dollar was already digesting the Federal Reserve’s latest decision and a softer US inflation reading. That mix gave bulls more room to push the pair above closely watched technical levels.

Federal Reserve Hold Keeps Dollar Under Pressure

The Federal Reserve’s decision on Wednesday remained a major part of the currency market backdrop. As widely expected, policymakers left interest rates unchanged between 3.50% and 3.75%. The decision did not remove uncertainty from the outlook, however, because three officials voted to hike interest rates, possibly citing elevated inflation. That split highlighted a central challenge for dollar traders: inflation has cooled from prior readings, but it has not disappeared as a policy concern.

For EUR/USD, the rate decision helped reinforce the idea that the Fed may be cautious rather than aggressively hawkish in the near term. When a central bank holds rates steady, currency markets often focus on whether the decision signals a pause, a turning point, or simply a temporary wait-and-see approach. In this case, the presence of officials favoring a hike suggested that the Fed is not ready to declare victory on inflation, yet the broader decision to keep rates unchanged limited the dollar’s immediate upside.

The euro benefited as traders weighed the balance between still-elevated US rates and signs that inflation momentum may be softening. The pair has now soared by over 1.5% from its lowest level this year, underscoring how quickly sentiment can turn when macro data and chart structure align.

PCE Inflation Cools, But July Energy Risk Lingers

The latest US Personal Consumption Expenditures Price Index added another layer to the EUR/USD move. The report showed that PCE rose 3.7% in the 12 months through June after advancing by 4.1% in May. The reading was in line with expectations, giving markets little reason to price in a surprise policy shock immediately after the Fed decision.

The composition of the inflation backdrop still matters. The softer June reading occurred as the US-Iran Memorandum of Understanding pushed oil prices much lower in June. That helped ease pressure in a key area that can quickly feed into consumer inflation. However, there is a risk that the index will tick higher in the upcoming report because gasoline prices moved above $4 in July. That risk may keep traders cautious about extending dollar-negative positions too aggressively before the next round of data.

Currency markets typically respond not only to the level of inflation, but also to whether inflation is moving in a direction that changes central bank expectations. A cooler PCE figure can weaken the case for additional tightening, while a rebound driven by energy prices can revive concerns that policymakers may need to maintain a firmer stance. This is why EUR/USD traders are likely to remain sensitive to any data that points to changing price pressure in the US economy.

Technical Setup Favors Bulls After Break Above Neckline

The daily chart has strengthened the bullish case for EUR/USD in recent sessions. The pair rebounded from a low of 1.1350 to 1.1530, with the move following the formation of a double-bottom pattern. Technical traders often view a double bottom as a potential reversal signal because it suggests that sellers failed to push the market below the same support zone on a second attempt.

The recovery became more significant after EUR/USD moved above 1.1483, the neckline of the pattern and a crucial resistance level. A sustained move above a neckline can attract additional buyers because it signals that a prior bearish structure may be breaking down. The pair also jumped above the 50-day Exponential Moving Average, another development that chart watchers often interpret as evidence that bullish momentum is improving.

Momentum indicators are also supporting the rebound. The Relative Strength Index climbed to 62, its highest level since April. That does not automatically guarantee further upside, but it shows that buying pressure has strengthened compared with previous sessions. When price action, moving averages, and momentum indicators point in the same direction, short-term traders often become more willing to follow the trend.

Bullish and Bearish EUR/USD Scenarios

The bullish scenario focuses on buying EUR/USD with a take-profit at 1.1622 and a stop-loss at 1.1450. The timeline attached to that setup is 1-2 days. The 1.1622 area is important because it marks the highest point on June 16 and may act as the next upside target if traders continue to fill the fair value gap formed on June 17.

The bearish scenario focuses on selling EUR/USD with a take-profit at 1.1450 and a stop-loss at 1.1622. That view would become more relevant if the pair fails to hold above the recently reclaimed neckline at 1.1483 or if upcoming US data revives dollar demand. A move back below the neckline would weaken the bullish double-bottom signal and could encourage short-term traders to reassess the rebound.

For now, the market tone leans constructive as long as EUR/USD remains supported above the breakout zone. Still, the pair is entering a period where macro catalysts can quickly reshape expectations. Manufacturing PMI numbers from the US and Europe will offer an early read on business conditions, while the US nonfarm payrolls report is expected to be the most important release this week. Labor market strength or weakness can influence views on inflation, growth, and Fed policy, making it a key input for dollar direction.

Key Levels to Watch

The first major level for EUR/USD traders is 1.1483, the neckline that the pair has already moved above. Holding above that level would support the argument that bulls remain in control. A drop back below it could raise doubts about the durability of the rebound and shift attention toward 1.1450.

On the upside, 1.1622 is the key resistance and bullish target. A move toward that level would align with the view that traders may attempt to fill the fair value gap formed on June 17. Between current price action and that target, sentiment will likely depend on whether incoming data supports the recent dollar pullback or challenges it.

The broader message from the chart is that EUR/USD has moved from a defensive position into a more constructive setup. The double-bottom formation, the break above the neckline, the move above the 50-day EMA, and the stronger RSI reading all suggest that buyers have gained near-term influence. However, with inflation risk, energy prices, and labor data still in focus, the next move may depend as much on macro confirmation as on technical structure.

Outlook for EUR/USD

EUR/USD enters the next sessions with a bullish bias, but not without risks. The pause in planned attacks against Iran has reduced one source of immediate market stress, while the Fed’s decision to hold rates and the softer PCE reading have helped limit dollar momentum. Together, these factors allowed the euro to extend its recovery and push through important chart resistance.

Still, traders are unlikely to ignore the possibility that US inflation may tick higher in the upcoming report after gasoline prices moved above $4 in July. If energy-driven price pressure returns, the dollar could regain support, particularly if labor market data remains firm. Conversely, softer activity data or weaker employment signals could reinforce the case for further EUR/USD upside.

FXCOINZ expects market attention to remain fixed on the 1.1483 support area and the 1.1622 upside target. A sustained hold above the neckline would keep buyers focused on further gains, while a clear reversal below it would make the bearish 1.1450 level more relevant. In the near term, EUR/USD is likely to remain highly responsive to headlines around the Middle East, oil prices, US inflation expectations, and the next major economic releases.

Frequently Asked Questions (FAQs)

Why did EUR/USD rise?

EUR/USD rose after Donald Trump delayed planned attacks against Iranian infrastructure, reducing immediate geopolitical concerns. The pair also gained after the Federal Reserve left interest rates unchanged and US PCE inflation cooled to 3.7% in the 12 months through June.

What interest rate range did the Federal Reserve keep unchanged?

The Federal Reserve left interest rates unchanged between 3.50% and 3.75%. Three officials voted to hike rates, showing that some policymakers remained concerned about elevated inflation.

What was the latest US PCE inflation reading?

The Personal Consumption Expenditures Price Index rose 3.7% in the 12 months through June, down from 4.1% in May. The reading was in line with expectations.

Why are oil and gasoline prices important for EUR/USD?

Oil and gasoline prices matter because energy costs can influence inflation expectations. The June PCE reading benefited from lower oil prices, but there is a risk that the index could tick higher after gasoline prices moved above $4 in July.

What is the key bullish target for EUR/USD?

Some technical traders are watching 1.1622 as the main bullish target. That level was the highest point on June 16 and may become relevant if the pair continues rising after breaking above the 1.1483 neckline.

What is the key bearish level for EUR/USD?

The bearish scenario focuses on 1.1450 as a take-profit level. A move back below the 1.1483 neckline would weaken the bullish setup and could bring that level back into focus.

What technical pattern is supporting EUR/USD?

EUR/USD formed a double-bottom pattern after rebounding from 1.1350 to 1.1530. The pair then moved above the 1.1483 neckline, a development that technical traders often view as a bullish reversal signal.

What indicators are traders watching?

Traders are watching the 50-day Exponential Moving Average and the Relative Strength Index. EUR/USD moved above the 50-day EMA, while the RSI climbed to 62, its highest level since April.

What are the next major catalysts for EUR/USD?

The next key catalysts are the upcoming US and European manufacturing PMI numbers and the US nonfarm payrolls report. These releases could influence expectations for growth, inflation, and Federal Reserve policy.

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