- EUR/USD drops to near 1.1567 as the US Dollar strives for a recovery.
- US President Trump scrapped planned strikes toward Iran and signaled that they are close to reaching a deal.
- The ECB hikes its Deposit Facility rate by 25 bps to 2.25%.
The EUR/USD pair trades marginally lower at around 1.1567 during the European trading session on Friday. The major currency pair edges down as the US Dollar (USD) rebounds slightly after Thursday’s decline.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.13% higher to near 99.80.
The US Dollar fell sharply on Thursday after United States (US) President Donald Trump announced that he has canceled already-ordered military strikes on Iran, signaling that the deal is close to be finalized. The statement from US President Trump, through a post on Truth Social, diminished the appeal of safe-haven assets.
On the Eurozone front, the European Central Bank (ECB) has hiked its key interest rates by 25 basis points (bps), pushing the Deposit Facility rate higher to 2.25%. The ECB was expected to tighten monetary conditions in response to higher inflation driven by the energy crisis due to Middle East conflicts.
Analysts at Deutsche Bank expect the ECB to deliver one more interest rate hike in September.
EUR/USD technical analysis
EUR/USD trades slightly lower at around 1.1567 with a bearish near-term bias, holding below the 20-period exponential moving average (EMA) at 1.1603 while remaining capped by the broader descending trend structure. The pair is sliding within the range defined by the reclaimed resistance trend line, and the Relative Strength Index (RSI) at 42 leans lower but stays above oversold territory, which suggests persistent downside pressure rather than a capitulation sell-off.
On the topside, initial resistance is located at the 20-day EMA around 1.1603, with a stronger barrier at the downward resistance trend-line break zone near 1.1687. On the downside, the key level to watch is the upward support trend-line break area around 1.1503, where a decisive daily close below would likely open the door to a deeper bearish extension towards the March 30 low at 1.1443.
- EUR/USD Price Forecast: Needs to break above 20-day for sustained recovery
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- Euro: Downtrend against US Dollar targets lower supports – UOB
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