The EUR/USD currency pair bounced back above the 1.1500 level on Friday, following comments from US President Donald Trump. His statement that he was going to take two weeks to decide on either striking Iran has removed immediate market concerns about the potential for a regional war, and therefore put the Euro in a better place against the Greenback.
As of the time of writing, EUR/USD is trading around the 1.1520 level and has been for three consecutive days. The EUR/USD is expected to close down for the week, although it was uplifted by the change in risk sentiment as general market sentiment is still under pressure due to continued tensions within the Middle East and rising Oil prices, both of which pose risks to the already shaky Eurozone economy.
Fed Hawkishness Supports USD
At the beginning of the week, the Federal Reserve maintained its benchmark interest rate at 4.25% – 4.50% but held its two cuts in 2025. Although the Federal Reserve looked neutral, Chair Jerome Powell took a hawkish tone stance and pointed to incoming tariffs that would lead to rising inflation. Powell remarks caused the Dollar to rally in some sessions; however, the dollar has supported the safe-haven status, and formal interest rate outlook remains firm.
Eurozone Fundamentals Remain Weak
The Eurozone has an uncertain economic outlook. Recent evidence from France indicated that with respect to business climate sentiment, it remained subdued in June together with the level of manufacturer’s sentiment fell more than expected. The Eurozone also faces risks associated with unclear US-EU trade talks also with Trump’s July 9 tariff deadline looming. The uncertainty regarding the potential tariffs elevates downside pressure on the Euro.
EUR/USD Faces Resistance at 1.1570
Technically, the EUR/USD is still correcting from the high of 1.1630 reached on June 12th. After seeing a brief bounce back, the pair is still traded in a descending channel. Resistance sits at the 1.1570 level, and just below that is the upper channel line of 1.1540, and Tuesday’s high of 1.1530. A confirmed break above 1.1571 will help move the EUR/USD outlook on the open to neutral and aim for 1.1630.
On the downside, immediate support sits at 1.1440–1.1450. If the EUR/USD starts to create further selling waves and breaks, the shorter term sellers will appear. Below that level is support at 1.1370, the June 6 and 10 lows, which is also the 61.8% FIB retracement of the May rally.
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