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EUR/USD Price Forecast: Bearish Flag formation backs more downside

July 20, 2026

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EUR/USD edges down to near 1.1432 as the US Dollar bounces back.
The US Dollar rebounds despite Oil prices falling back.
Investors expect the ECB to leave interest rates unchanged in the policy announcement on Thursday.

The Euro (EUR) trades marginally lower near 1.1432 against the US Dollar (USD) during the European trading session on Monday. The major currency pair edges down as the US Dollar recovers its early losses.

At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally higher to near 100.77.

The Greenback bounces back even as Oil prices have retreated amid hopes of de-escalation in ongoing military aggression between the United States (US) and Iran. Higher oil prices de-anchor inflation projections that prompt Federal Reserve (Fed) interest rate expectations, a scenario that is favorable for the US Dollar.

This week, investors will pay close attention to the European Central Bank (ECB) monetary policy announcement on Thursday, in which policymakers are expected to leave policy rates steady. In the June policy meeting, officials raised key rates by 25 basis points (bps), but guided a meeting-by-meeting approach.

Latest remarks from ECB officials signaled that more interest rate hikes could be needed as price pressure will likely stay above the central bank’s 2% target for longer.

EUR/USD technical analysis

EUR/USD trades slightly lower at 1.1437, holding a mildly bearish near-term tone as it remains just under the 20-period Exponential Moving Average (EMA) at 1.1441, which now caps the upside. The price action suggests a Bearish Flag formation, which is a trend-continuation pattern. As price action suggests that the prior move was on the downside before a consolidation, the odds of further decline are significantly higher.

The Relative Strength Index (RSI) at about 47 leans slightly soft and hints that upside momentum is waning while the pair trades beneath its immediate dynamic resistance.

On the topside, initial resistance is located at the 20-day EMA around 1.1441, and a sustained break above this cap would expose the channel top near 1.1516 as the next hurdle. On the downside, the lower boundary of the rising channel at 1.1393 is the first notable support, and a decisive drop through this floor would weaken the constructive channel structure and open the door for further decline towards 1.1300.