Key Moments
- EUR/USD trades near 1.1390, extending opening losses as the U.S. Dollar strengthens on safe-haven demand.
- The U.S. Dollar Index (DXY) is up 0.2% around 101.15, supported by escalating U.S.-Iran tensions and shifting inflation expectations.
- Technical setup points to further downside in EUR/USD, with key support at 1.1324 and resistance near 1.1443.
Dollar Strengthens on Safe-Haven Flows
The Euro is trading lower against the U.S. Dollar during the mid-Asian session on Monday, with EUR/USD holding around 1.1390 and extending its opening losses. The pair remains under selling pressure as the Greenback starts the week stronger, supported by renewed demand for safe-haven assets.
At the time of writing, the U.S. Dollar Index (DXY), which tracks the performance of the Dollar against six major peers, is up 0.2% and trading near 101.15.
Heightened military activity between the United States and Iran, driven by Tehran’s efforts to assert control over the Strait of Hormuz – a key transit point for nearly 20% of global energy flows – has prompted investors to rotate into safe-haven instruments. This shift has also unsettled inflation expectations.
Key U.S. Data and Fed Testimony in Focus
Market participants are closely watching upcoming U.S. inflation data for further direction. The Consumer Price Index (CPI) report for June is due on Tuesday and is expected to provide important insight into current inflation dynamics.
In addition, investors will monitor Federal Reserve Chair Kevin Warsh’s two-day testimony before Congress, which begins on Tuesday. His remarks could influence expectations around monetary policy and impact currency markets, including EUR/USD.
EUR/USD Technical Picture: Bearish Bias Intact
From a technical perspective, EUR/USD is trading on the back foot around 1.1390, maintaining a bearish short-term outlook. The pair remains below the 20-period Exponential Moving Average (EMA), which stands at 1.1443, and has broken down from a Bearish Flag formation, reinforcing downside prospects.
The 14-period Relative Strength Index (RSI) is hovering near 38, indicating ongoing, though not extreme, downward momentum.
| Level | Price | Comment |
|---|---|---|
| Initial resistance | 1.1424 | Aligned with lower boundary of parallel channel |
| Next resistance | 1.1443 | 20-period EMA |
| Stronger resistance | 1.1530 | Top of the parallel channel |
| First major support | 1.1324 | June 24 low |
| Secondary support | 1.1300 | Psychological level |
On the upside, initial resistance is located near 1.1424 at the lower boundary of the parallel channel, followed by the 20-period EMA at 1.1443. If a rebound extends, the upper edge of the channel around 1.1530 is seen as a more significant barrier.
On the downside, the June 24 low at 1.1324 is the first notable support, with 1.1300 providing an additional floor below that level.
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