EUR/USD stalls below 1.1500 as Fed holds, Trump comments lift Dollar

The EUR/USD trades almost flat after climbing past the 1.1500 figure, following the Federal Reserve's decision to hold rates unchanged, amid increasing tensions in the Middle East. This, along with comments from US President Donald Trump, boosted the Dollar, capping the Euro’s advance. 

EUR/USD Technical Overview

EUR/USD faces immediate resistance at the 2025 peak of 1.1631 (June 12), ahead of the October 2021 peak of 1.1692 and the round figure at 1.1700.

On the downside, support lies at the 55-day SMA at 1.1315, prior to the weekly trough of 1.1210 (May 29) and the monthly base of 1.1064 (May 12).

Momentum indicators paint a mixed picture: the Relative Strength Index (RSI) reading around 59 suggests bullish tilt, while the Average Directional Index (ADX) near 21 points to a modest trend strength.

Fundamental Overview

The Euro (EUR) added to Tuesday’s weakness and drifted to fresh lows vs. the US Dollar (USD) on Wednesday. In fact, EUR/USD managed to reclaim the 1.1500 hurdle earlier in the day but eventually succumbed to the late Powell-led bounce in the US Dollar Index (DXY), which flirted with the key 99.00 barrier.

The move lower in the pair also came in tandem with extra weakness in US yields across different time frames as well as the second daily pullback in German 10-year bund yields.

Geopolitics adds to trade uncertaintyHeightened tensions in the Middle East have offset any fresh momentum from US-China trade talks, while the July 9 deadline for the “Liberation Day” tariffs continued to weigh on sentiment.

Indeed, the conflict between Israel and Iran escalated in recent hours, with market participants now starting to speculate over the potential intervention of the US in the crisis.

Divergent Central bank pathsFollowing the Fed’s meeting, there was unanimous agreement to keep rates between 4.25% and 4.50%, and according to the quarterly forecasts, officials now anticipate somewhat higher unemployment and inflation than they did prior to the recent tariff announcements.

Regarding future rate changes, Fed officials are still split: only two call for a single cut, while seven policymakers, up from four in March, now anticipate no reductions at all, even though the median dot plot still indicates a total of 50 basis points of cuts by year-end. Two officials anticipate an additional quarter-point cut, while eight officials see rates being lowered to 3.75% to 4.00%. The median forecast for 2026 increased slightly from 3.4% in March to 3.6%.

Back to the ECB, the central bank trimmed its deposit rate to 2.00% earlier this month but struck a cautiously hawkish tone. President Christine Lagarde ruled out further easing unless external conditions deteriorate sharply and lifted growth forecasts.

Positioning points to a bullish EuroSpeculative interest in the euro has swelled: CFTC data through June 10 show open interest near its highest level in years, with net long contracts at fresh multi-month highs. Commercial hedgers, meanwhile, have increased short exposure, signalling institutional caution.