FX.co ★ Der | EUR/USD

The EUR/USD exchange rate remains under distinct selling pressure during Friday’s American session, breaching daily lows and pressing beneath the 1.1400 psychological mark. Market participants showed little reaction to the latest flash S&P Global Purchasing Managers Index (PMI) data from the United States, which revealed a divergent picture in private sector activity. While manufacturing output eased to a multi-month low, accelerated expansion across the services sector pushed the composite reading to an eight-month high of 53.6. Rather than domestic economic releases, global macro sentiment continues to be dominated by escalating geopolitical confrontation in the Middle East and the derivative threat of sticky global inflation. Technically, spot prices maintain a clear bearish tilt following last week's failed attempt to clear the 1.1480–1.1485 resistance zone, an area reinforced by the 200-period Simple Moving Average (SMA). Technical indicators validate this prevailing downward bias; the Moving Average Convergence Divergence (MACD) remains pinned below its zero signal line with a negative reading, while the 14-period Relative Strength Index (RSI) sits at 40.95, hovering firmly beneath the neutral 50 threshold. Together, these momentum oscillators underscore fading buying interest and support the case for an extended slide. As long as price action remains capped beneath the 200-period SMA, the path of least resistance favors a sustained break below 1.1400, exposing the pair to a potential retest of its year-to-date low near 1.1325, recorded on June 24. Conversely, a convincing close above 1.1480 would be required to neutralize short-term bearish momentum and open the door for a broader structural recovery. Adding fundamental tailwinds to the US Dollar, interest rate expectations are shifting rapidly as investors evaluate persistent economic resilience alongside rising energy prices. According to the CME FedWatch tool, interest rate futures currently price in a 35.8% probability of an immediate Federal Reserve rate hike at this month's meeting, with the likelihood of a quarter-point rate increase by September rising sharply to 82.1%. This hawkish repricing is largely driven by intensifying geopolitical friction. Tensions surged following reports that Yemen’s Iran-backed Houthi militant group targeted two Saudi oil tankers in the Red Sea, citing violations of a declared blockade. In response, the United States conducted its 13th consecutive night of retaliatory military strikes against targets in Iran. The situation deteriorated further after US President Donald Trump issued explicit warnings of imminent, major military action against both Iran and Houthi forces, noting that plans for a massive military operation are under active consideration.

Simultaneously, trade policy uncertainty has resurfaced as a primary market variable following reports that the US administration plans to implement new tariffs ranging between 10% and 12.5% on imports from major international trading partners. Designed to rebuild trade barriers in the wake of recent judicial rulings, the tariff framework reportedly includes a baseline 10% levy on goods originating from the European Union, structured to navigate existing US-EU trade commitments. Against this backdrop of international trade tension and geopolitical risk, the Greenback continues to draw safe-haven inflows while benefiting from its status as a high-yielding reserve currency. Meanwhile, euro traders continue to process the European Central Bank’s recent monetary policy stance. Following a 25-basis-point rate hike in June, the ECB Governing Council elected to keep key policy rates unchanged at its latest meeting, leaving the deposit facility, main refinancing operations, and marginal lending facility rates at 2.25%, 2.40%, and 2.65%, respectively. Although policymakers reiterated their unwavering commitment to steering inflation back toward the 2% medium-term target, they cautioned that economic uncertainty remains exceptionally elevated. Central bank officials emphasized that the full inflationary pass-through from recent energy price shocks has yet to fully transmit through the Eurozone economy, leaving European policy settings in a precarious position as growth softens while price pressures linger.