EUR/USD Price Analysis and Forecast: Expectations of an ECB Rate Hike in June Provide Support for the Euro

The EUR/USD pair is struggling to build on the recent recovery from the 1.1585 support level seen over the two trading sessions ahead of the weekend. The pair is fluctuating between modest losses and slight gains. Current spot prices are trading around the 14-day EMA and remain relatively stable following the release of German retail sales data, which exceeded market expectations.

Official data published by Destatis showed that German retail sales, a key indicator of consumer spending, declined by 0.3% in April. However, the decrease was slightly better than the expected 0.4% decline and matched the revised March reading of -0.3%.The EUR/USD pair is receiving some support from positive macroeconomic developments, despite the broader strength of the U.S. dollar, which is limiting significant upside gains. The U.S. Dollar Index (DXY), which measures the dollar against a basket of major currencies, is recovering from the two-week low reached on Friday amid ongoing geopolitical uncertainty and expectations that the Federal Reserve will maintain a hawkish monetary policy stance.

Significant disagreements between Washington and Tehran regarding Iran's nuclear program and the situation in the Strait of Hormuz continue to complicate diplomatic efforts aimed at reaching an agreement necessary to end the months-long conflict in the Middle East.Iran's chief negotiator, Mohammad Bagher Ghalibaf, stated that the country would not agree to any deal until its national rights are fully protected. In addition, reports suggest that the United States is hardening its position in negotiations with Iran. The situation is further complicated by Israel's military operations in Lebanon, which continue to fuel geopolitical risks and increase demand for the U.S. dollar as a safe-haven asset, creating obstacles to further gains in EUR/USD.

Meanwhile, recent developments have contributed to a moderate recovery in oil prices, which reached a new monthly low on Friday. This has reignited inflation concerns and reinforced expectations that the Federal Reserve may raise interest rates in 2026, providing additional support to the U.S. dollar. Nevertheless, expectations that the European Central Bank could raise rates as early as this month are helping to limit downside pressure on EUR/USD.

For better trading opportunities today, market participants should wait for the release of the U.S. ISM Manufacturing PMI at the beginning of the North American session. Additional key U.S. macroeconomic releases are scheduled later this week, including the closely watched Nonfarm Payrolls (NFP) report on Friday. Together with further developments related to the conflict in the Middle East, these events are likely to increase volatility in the EUR/USD pair.

From a technical perspective, bulls need to break above and consolidate above all key moving averages to regain control of the market, with the last major resistance represented by the psychological 1.1700 level. However, this remains challenging as momentum oscillators continue to generate negative signals. At the same time, the Relative Strength Index (RSI) remains in neutral territory, indicating a balance of power between bulls and bears.

It is also worth noting that the 100-day and 200-day Simple Moving Averages (SMAs) remain flat, confirming the ongoing sideways trading range.

The table below shows the percentage change in the U.S. dollar against major currencies today. In particular, the U.S. dollar has strengthened against the New Zealand dollar.