EUR/USD Extends Weekly Losses After Fed's Hawkish Hold

Summary:

EUR/USD fell to a two-month low near 1.1480 on Thursday as a hawkish Federal Reserve and weakening German economic outlook boosted demand for the US Dollar. Rising Treasury yields and growing expectations of another Fed rate hike added further pressure on the Euro.

Sell EURUSD

EXP

Trading

1.14600

ENTRY

1.13000

TGT

1.15500

1.14637 -0.00365 -0.32%

Point

Flat

1.13000

TGT

CLOSING

1.14600

ENTRY

1.15500

The Euro remained under heavy selling pressure on Thursday, with EUR/USD slipping to its lowest level in two months near 1.1478 as investors continued to favor the US Dollar following a hawkish Federal Reserve meeting and disappointing economic signals from Germany.

The common currency has now reversed sharply from Tuesday's highs above 1.1600 and is on track for a weekly decline of nearly 1%, highlighting the growing divergence between the economic and monetary policy outlooks on both sides of the Atlantic.

The primary catalyst behind the move was Wednesday's Federal Reserve policy decision, the first meeting chaired by Kevin Warsh. While policymakers left interest rates unchanged at 3.50%-3.75%, the tone of the meeting was notably more hawkish than many investors had anticipated.

Warsh reaffirmed the central bank's commitment to returning inflation to its 2% target and oversaw a policy statement that removed references to an easing bias. The updated economic projections also revealed that nearly half of Fed officials expect at least one additional rate increase before the end of the year.

The hawkish shift prompted a sharp rise in US Treasury yields and strengthened the Dollar across major currency markets. Investors interpreted the Fed's message as a signal that policymakers remain prepared to tighten policy further if inflation fails to moderate sufficiently.

The Euro, meanwhile, faced pressure from a deteriorating economic backdrop in Germany. Updated forecasts from the IFO Institute pointed to a challenging mix of persistent inflation and sluggish growth in Europe's largest economy. German inflation is expected to remain elevated over the coming years, while economic growth is forecast to remain weak, reinforcing concerns that the country may struggle to generate meaningful momentum.

Additional Eurozone data offered little support. The region's current account surplus rose to EUR 15.7 billion in April from EUR 14.9 billion previously, but the figure fell short of market expectations. Construction output growth also slowed sharply to 0.6% from a revised 1.7% increase in March, adding to concerns about weakening activity across the bloc.

Technical Analysis

EUR/USD remains under clear bearish pressure on the 4-hour chart, with price trading around 1.1455 after breaking below the key 1.1500 support zone. The pair has been in a steady downtrend since rejecting the 1.1780–1.1800 resistance region in early May, and the latest breakdown confirms that sellers remain firmly in control.

The most important technical development is the failure to hold above 1.1500, which had acted as a major demand zone in recent sessions. Once this level gave way, bearish momentum accelerated, pushing the pair into fresh lower territory. This breakdown suggests that the market has shifted from consolidation into continuation selling.

Immediate resistance is now located around 1.1500–1.1510, where former support is likely to act as new resistance. Any recovery toward this area may attract fresh selling pressure unless bulls can reclaim it decisively. Above that, the next major resistance sits near 1.1580–1.1600, but price would need a strong reversal to challenge that zone.

On the downside, the next key target is located around 1.1350, which aligns with the projected bearish move shown on the chart. A sustained break below this level would expose deeper losses toward 1.1300, signaling a broader continuation of the bearish trend.

Momentum remains negative, with price forming lower highs and lower lows across the chart. The recent rejection from the 1.1600 area and sharp decline below 1.1500 confirm that rallies are still being sold.

TRADE RECOMMENDATION

SELL EUR/USD

ENTRY PRICE: 1.1460

STOP LOSS: 1.1550

TAKE PROFIT : 1.1300

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

Rank

Articless

2630

Win Rate

63.41%

P/L Ratio

0.74

Focus on

XAUUSD, GBPUSD, EURUSD

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