EUR/USD stays rangebound as US-Iran tensions ease and traders await the US CPI report
FUNDAMENTAL OVERVIEW
USD:
The US dollar gave back most of its gains after Trump walked back on his hawkish rhetoric and said that negotiations would continue, claiming that Iran called him to make a deal.
That was enough to trigger a dovish repricing in interest rate expectations, taking us back to pre-escalation conditions. Barring another US-Iran escalation, the price action should remain mostly rangebound into the US CPI report due on Tuesday.
The CPI should have a major influence on interest rate expectations given the Fed’s focus on inflation. If the data surprises to the upside, we will likely see another rally in the US dollar on a hawkish repricing. Conversely, lower than expected figures should extend the recent correction on peak inflation narrative.
EUR:
On the EUR side, the June inflation data showed a welcome easing for the ECB which coupled with the quick drop in energy prices, greatly diminished the urgency for further tightening. This is also what policymakers have been communicating via their recent speeches which basically sealed a pause in July.
The market is still pricing in a 35% chance of a hike in July, although it should stand much lower. Moreover, there’s a total of 37 bps of tightening priced in by year-end which suggests the market is expecting at least another rate hike from the ECB in 2026. For now, the data supports a prolonged pause.
EURUSD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that EURUSDis still consolidating above the key 1.14 support. From a risk management perspective, the sellers will have a better risk to reward setup around the major downward trendline to position for a drop into the 1.10 handle next. The buyers, on the other hand, will want to see the price breaking higher to open the door for a rally into the 1.18 handle.
EURUSD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have an upward trendline defining the correction. If we get a pullback into the trendline, we can expect the buyers to lean on it with a defined risk below it to keep pushing into the major downward trendline. The sellers, on the other hand, will want to see the price breaking below the trendline and the support to pile in for a drop into new lows.
EURUSD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s not much we can add as the buyers will have a better risk to reward setup around the upward trendline, while the sellers will either wait for the price to hit the major downward trendline or break below the 1.14 support. The red lines define the average daily range for today.
This article was written by flfeaa2662d774455a8d50fa77b791ed5f at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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