The euro is struggling to move away from its two-month low near 1.1500, caught between the technical upside ahead of tonight's European Central Bank (ECB) announcement and the strength of the US dollar (USD) as an absolute safety net due to the closure of the Strait of Hormuz.
------------------------------------------------------------------------------------------------
✅ Fundamental Dynamics: ECB Interest Rate Bets Against US Inflation Explosion
The foreign exchange market is holding its breath ahead of two major catalysts due to be released almost simultaneously tonight:
- ⚡ECB Judgment Day (25 basis point hike already priced in): The ECB will conclude its two-day policy meeting tonight. The market has already locked in a 25 basis point (bp) interest rate hike. The main focus of major institutions is purely on President Christine Lagarde's press conference.
- ⚡If the ECB shows hesitation or a lack of commitment to further monetary tightening due to the risk of a war recession, the market will interpret this as a dovish signal that could trigger a massive sell-off in the euro.
- ⚡US Inflation Monster (CPI 4.2%): Last night's US CPI data confirmed that headline inflation jumped to 4.2% YoY—the highest level in three years due to a 23.5% surge in upstream energy costs. This figure, which is more than double the Federal Reserve's (The Fed) target, reinforces projections that US interest rates will creep up by the end of 2026.
- ⚡Physical Blockade in the Strait of Hormuz: Military tensions reached a critical level after Iran officially closed the Strait of Hormuz following a series of airstrikes ordered by President Donald Trump. Iran's Islamic Revolutionary Guard Corps (IRGC) confirmed it had shot down two commercial vessels attempting to cross the waterway.
------------------------------------------------------------------------------------------------
✅ Technical Analysis: Bearish Structure Shadows Psychological Support Area (H4)
Technically, the EUR/USD intraday (4-Hour) chart shows a neutral-defensive consolidation phase where the medium-term downtrend remains in full control of the market:
- ⚡H4 RSI (Below 50): Shows very weak buying pressure (bullish impulse), confirming that the current slight increase is merely a retail short-term position adjustment (position squaring).
- ⚡Obstacle: Euro bulls face a strong barrier at 1.1580 (former strong support in May). As long as this level is not broken cleanly by the close of tonight's H4 candle, EUR/USD remains vulnerable to a price rejection (fading rally).
------------------------------------------------------------------------------------------------
✅ Fundamental Dynamics: ECB Interest Rate Bets Against US Inflation Explosion
The foreign exchange market is holding its breath ahead of two major catalysts due to be released almost simultaneously tonight:
- ⚡ECB Judgment Day (25 basis point hike already priced in): The ECB will conclude its two-day policy meeting tonight. The market has already locked in a 25 basis point (bp) interest rate hike. The main focus of major institutions is purely on President Christine Lagarde's press conference.
- ⚡If the ECB shows hesitation or a lack of commitment to further monetary tightening due to the risk of a war recession, the market will interpret this as a dovish signal that could trigger a massive sell-off in the euro.
- ⚡US Inflation Monster (CPI 4.2%): Last night's US CPI data confirmed that headline inflation jumped to 4.2% YoY—the highest level in three years due to a 23.5% surge in upstream energy costs. This figure, which is more than double the Federal Reserve's (The Fed) target, reinforces projections that US interest rates will creep up by the end of 2026.
- ⚡Physical Blockade in the Strait of Hormuz: Military tensions reached a critical level after Iran officially closed the Strait of Hormuz following a series of airstrikes ordered by President Donald Trump. Iran's Islamic Revolutionary Guard Corps (IRGC) confirmed it had shot down two commercial vessels attempting to cross the waterway.
------------------------------------------------------------------------------------------------
✅ Technical Analysis: Bearish Structure Shadows Psychological Support Area (H4)
Technically, the EUR/USD intraday (4-Hour) chart shows a neutral-defensive consolidation phase where the medium-term downtrend remains in full control of the market:
- ⚡H4 RSI (Below 50): Shows very weak buying pressure (bullish impulse), confirming that the current slight increase is merely a retail short-term position adjustment (position squaring).
- ⚡Obstacle: Euro bulls face a strong barrier at 1.1580 (former strong support in May). As long as this level is not broken cleanly by the close of tonight's H4 candle, EUR/USD remains vulnerable to a price rejection (fading rally).
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.