The EUR/USD currency pair traded marginally higher near 1.1600 during the early European session on Thursday, but remained close to Wednesday’s low, reflecting ongoing uncertainty in the market direction [1]. The Euro is broadly under pressure, attributed to higher energy prices stemming from the Middle East crisis, which has reduced the appeal of currencies from economies heavily reliant on oil imports, such as the Eurozone [1].
On the monetary policy front, investors are divided on whether the European Central Bank (ECB) will raise interest rates at its upcoming policy meeting. However, it is expected that the ECB will discuss tightening monetary conditions in response to persistent inflationary pressures. In May, the headline Harmonized Index of Consumer Prices (HICP) rose to 3.2% year-on-year, while the core HICP increased to 2.5% year-on-year, both exceeding consensus estimates and previous readings (core HICP consensus: 2.4%, previous: 2.2%) [1].
Meanwhile, the US Dollar Index (DXY) edged down to near 99.45 but remained close to its eight-week high of 99.55, supported by ongoing geopolitical tensions between the United States and Iran [1]. Market participants are also awaiting the release of the US Nonfarm Payrolls (NFP) data for May, scheduled for Friday, which could further influence currency movements [1].
From a technical perspective, EUR/USD remains bearish in the near term, trading below the 20-day exponential moving average (EMA) at 1.1646. The Relative Strength Index (RSI) is around 43, indicating that sellers retain control despite recent price stabilization. Key resistance is identified at the 20-day EMA (1.1646), while a drop below the May 21 low at 1.1576 could open the door to further declines toward 1.1500 [1].
CONCLUSION
The EUR/USD pair remains under pressure due to elevated energy prices and uncertainty over ECB policy direction, despite a slight uptick in inflation data. Technical indicators suggest a bearish outlook unless the pair can reclaim levels above the 20-day EMA. Market participants are closely watching upcoming US economic data for further cues.