The Euro (EUR) traded at 1.1535 against the US Dollar (USD) on Thursday, hovering near two-month lows around 1.1500, as investors awaited the outcome of the European Central Bank's (ECB) monetary policy meeting later in the day [1]. The market widely expects the ECB to announce a 25-basis-point rate hike, raising the deposit facility rate from 2% to a consensus of 2.25% [1]. However, traders are focused on President Christine Lagarde's press conference for signals regarding future monetary policy. A lack of commitment to further tightening could be interpreted as dovish, potentially triggering additional Euro weakness [1].
The subdued performance of the Euro is also influenced by heightened geopolitical risks, following fresh US strikes on Iran and threats of further action from US President Donald Trump if Tehran does not sign a deal [1]. This has dampened risk appetite across markets, with traders seeking more certainty despite reports from CNN News that peace negotiations remain on track [1].
In the US, inflation data released on Wednesday showed the Consumer Price Index (CPI) accelerating to a 4.2% year-over-year pace in May, the highest in over three years and more than double the Federal Reserve's 2% target [1]. This has fueled expectations of Fed rate hikes later in the year, providing additional support to the USD and exerting further pressure on the EUR/USD pair [1].
Technical analysis indicates that EUR/USD remains vulnerable, with resistance at 1.1580 capping upside attempts and a break below 1.1500 potentially exposing further downside targets at 1.1443 and 1.1411 [1]. Intraday indicators are mixed, with the Relative Strength Index (RSI) below 50 and the Moving Average Convergence Divergence (MACD) showing only tentative stabilization [1].
CONCLUSION
The Euro remains under pressure near two-month lows as markets await the ECB's rate decision and guidance on future policy. Elevated US inflation and geopolitical tensions are supporting the USD and weighing on risk sentiment. A dovish tone from the ECB could trigger further Euro losses, with technical levels suggesting vulnerability below 1.1500.