Key Moments
- EUR/USD trades near 1.1567 on Friday as a modest US Dollar recovery weighs on the pair.
- The ECB raises its Deposit Facility rate by 25 bps to 2.25% in response to inflation pressures.
- Technical structure keeps EUR/USD below the 20-day EMA at 1.1603, with support eyed near 1.1503 and 1.1443.
Dollar Recovery Pressures EUR/USD
EUR/USD is slightly weaker around 1.1567 in the European session on Friday, with the pair edging lower as the US Dollar stages a modest rebound following its decline on Thursday.
The US Dollar Index (DXY), which tracks the currency against a basket of six major peers, is quoted 0.13% higher, trading close to 99.80 at the time of writing.
Geopolitics and Safe-Haven Flows
The Greenback slid sharply on Thursday after United States President Donald Trump said he had called off already-ordered military strikes on Iran, while indicating that an agreement is close. The message, delivered in a post on Truth Social, reduced demand for traditional safe-haven assets.
ECB Rate Decision and Outlook
On the Eurozone side, the European Central Bank has increased its key interest rates by 25 basis points, lifting the Deposit Facility rate to 2.25%. The move had been anticipated as the ECB responds to elevated inflation attributed to the energy shock stemming from conflicts in the Middle East.
According to analysts at Deutsche Bank, the ECB is expected to implement an additional rate increase in September.
EUR/USD Technical Picture
From a technical standpoint, EUR/USD is trading marginally lower near 1.1567 with a bearish short-term tone. The pair is holding beneath the 20-period exponential moving average at 1.1603 and remains constrained by a broader downward trend structure.
Price action is sliding within a range defined by a reclaimed resistance trend line, while the Relative Strength Index sits at 42, tilting lower but staying above oversold territory. This points to ongoing downside pressure rather than a sharp capitulation move.
| Level | Type | Value |
|---|---|---|
| 1.1603 | 20-day EMA / initial resistance | Upside level to clear for recovery attempts |
| 1.1687 | Downward resistance trend-line zone | Stronger resistance on the topside |
| 1.1503 | Upward support trend-line break area | Key downside level; a daily close below could deepen losses |
| 1.1443 | March 30 low | Next bearish target if 1.1503 gives way |
On the upside, the first obstacle is the 20-day EMA around 1.1603, followed by more substantial resistance at the area around 1.1687, where a downward resistance trend line was previously broken. On the downside, traders are focused on the upward support trend-line break zone near 1.1503. A firm daily close below that area would likely pave the way for a more pronounced decline toward the March 30 low at 1.1443.
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