Euro Holds Near Multi-Month Lows Ahead of U.S. Data

Key Moments

Euro Under Pressure as Dollar Extends Bullish Tone

The EUR/USD pair remains under sustained selling pressure for a third consecutive session, trading near the 1.1330 area during Asian hours on Wednesday. The pair is holding just above the low reached the previous day, which marked its weakest level since May 2025. The overall setup continues to favor sellers, with the prevailing backdrop suggesting that the path of least resistance points lower.

A key drag on the Euro has been the latest comments from European Central Bank (ECB) President Christine Lagarde. Her remarks on Tuesday were perceived as leaning dovish and ran counter to market expectations for another rate increase in October, weighing on the shared currency. At the same time, the US Dollar (USD) is maintaining a firm bullish bias, trading close to a two-month peak, and this strength is adding to the downward momentum in EUR/USD.

Central Bank Expectations and Geopolitics Bolster the Dollar

The initial reaction to New York Federal Reserve (Fed) President John Williams’ comments on Tuesday – that the US central bank does not need to rush its next move – proved short-lived. Market participants are still pricing in over a 90% probability of at least one additional rate hike by year-end, underpinning the USD.

Geopolitical tensions are also enhancing the Dollar’s appeal as a safe-haven asset. The ongoing US-Iran standoff continues to support demand for the greenback and reinforces the negative tone surrounding EUR/USD.

Hopes for a diplomatic resolution to the US-Iran conflict have dimmed after US President Donald Trump rejected a seven-day ceasefire proposal from Iran. Efforts by Qatar to mediate a breakthrough between the two sides have shown limited progress this week. In addition, US officials believe that Trump could order a return to major combat against Iran after the midterm elections in November.

These developments maintain a geopolitical risk premium in markets, favoring USD bulls. Even so, many traders are likely to avoid aggressive positioning ahead of upcoming US macro releases.

Data Watch: PCE, Q2 GDP and NFP in Focus

Attention is turning to the release of the US Personal Consumption Expenditures (PCE) Price Index, which will be published alongside the final reading of US Q2 GDP. Both data points are expected to influence USD price action and could inject fresh volatility into EUR/USD during the North American session.

Looking ahead, market participants will closely track the monthly US jobs report, commonly referred to as Nonfarm Payrolls (NFP), scheduled for Friday. In addition, speeches from key Federal Open Market Committee (FOMC) members will be monitored for further signals on the Fed’s policy trajectory. The evolving policy outlook is likely to play a central role in defining the next clear directional move for the USD and, by extension, for EUR/USD.

EUR/USD Technical Setting: Bears Maintain the Upper Hand

From a technical standpoint, EUR/USD retains a bearish near-term profile after breaking below horizontal support at 1.1350 in the previous session. Sellers are now looking for a decisive move under the 1.1300 handle to confirm scope for additional downside.

On the upside, the former support level at 1.1350 is now acting as initial resistance. A sustained recovery above this barrier could open the door for a retest of the 1.1400 region. However, any further strength is still likely to be viewed as an opportunity to re-establish short positions and may remain limited.