Euro Slides as EUR/USD Tests Key Technical Support

Key Moments

Risk Sentiment and Geopolitics Pressure the Euro

EUR/USD weakens to around 1.1465 during Monday’s early European session, as sellers retain control and the pair struggles to find traction. Downside forces remain dominant, with the Relative Strength Index (RSI) holding below the neutral 50 level, reinforcing the prevailing negative bias. The next notable support level is seen at 1.1450, while immediate resistance stands near 1.1570.

The decline in the Euro comes amid ongoing uncertainty over a potential US-Iran peace agreement. Concerns have intensified following threats from President Donald Trump to restart hostilities in the Middle East, dampening demand for risk-sensitive assets such as the Euro against the US Dollar.

In a joint statement on Monday, Qatar and Pakistan confirmed the conclusion of negotiations between the US and Iran in Bürgenstock, Switzerland, noting that the talks took place in a “positive, constructive atmosphere.” According to the statement, mediation efforts by Pakistan and Qatar resulted in substantial progress toward resolving the Lebanon conflict. The statement added that oil and petrochemical exports are exempt, the blockade is lifted, some frozen assets are released, and a large-scale reconstruction and development initiative for Iran is being launched.

ECB Policy Outlook Offers Some Counterbalance

While geopolitical tensions weigh on the Euro, comments from European Central Bank (ECB) officials provide some support on the policy front. On Friday, ECB policymaker and head of Belgium’s central bank, Pierre Wunsch, stated that the central bank may implement one more interest rate increase as soon as next month if there is further evidence that inflation in the Eurozone is broadening beyond energy.

The ECB’s deposit facility rate is currently at 2.25%. Market pricing reflects expectations of additional 25 basis point increases in either September or October, with the potential for another move in the early part of next year.

Technical Picture: Bearish Bias Dominates

On the daily chart, EUR/USD continues to trade with a pronounced bearish bias. The spot price remains firmly below both the 100-day simple moving average (SMA) and the middle line of the Bollinger Bands, confirming downside control.

The pair is edging closer to the lower Bollinger Band, which acts as immediate support around 1.1450. The RSI, hovering near 34, is approaching oversold territory. This configuration signals persistent downside pressure but also hints that selling strength could start to wane as the pair approaches current levels.

On the downside, a clear break below the lower Bollinger Band near 1.1450 would signal room for a continuation toward new lows within the broader downtrend. On the upside, the first obstacle is located at the Bollinger middle band around 1.1570. Above that, the 100-day SMA at 1.1665 and the upper Bollinger Band near 1.1695 form additional resistance layers. A recovery back above the mid-band would be needed to alleviate the prevailing bearish narrative.