EUR/USD reaches new monthly lows beneath 1.1360, approaching 13-month lows at 1.1324. A subdued risk appetite in the context of declining oil prices has not been sufficient to bolster the Euro. The US Dollar rallies to fresh highs amid hopes of a surprise Fed rate hike on Thursday. The Euro is failing to draw any significant support from the truce in the Middle East and the lower Oil prices and keeps heading south against the US Dollar on Tuesday. EUR/USD bears are probing new one-month lows beneath 1.1360, approaching the year-to-date low of 1.1324.
Market optimism regarding a negotiated resolution to the US-Iran conflict, coupled with a 12% decline in Brent Oil prices, has fostered a slight risk appetite during the European session. Consequently, European stock markets are exhibiting marginal gains after a negative session in Asia. Risk appetite, however, has not manifested in a weaker US Dollar this time, as traders maintain expectations that the Federal Reserve may implement a surprise rate hike later this week. Futures markets are currently assigning a 35% probability to a 25 basis point increase on Thursday, an increase from the 25% observed a week prior, as indicated by data from the CME Group’s FedWatch Tool.
This development is bolstering support for the US Dollar, which has achieved new monthly highs against a range of currencies. EUR/USD is currently at 1.1362, exhibiting a slight bearish trend following a rejection at the 1.1420 level on Monday, as price action nears year-to-date lows. The 4-hour Relative Strength Index (14) is declining from the neutral 50 line, while the Moving Average Convergence Divergence has dipped into negative territory, albeit remaining close to zero. Momentum appears to be flat to slightly bearish, lacking an impulsive directional trend thus far.
If the pair confirms below the bottom of the monthly channel at 1.1360, bears are likely to be drawn to the 2026 trading floor of 1.1324. Below here, the area between the 127.2% Fibonacci extension of the June 17-24 sell-off, at 1.1245, and the late May 2025 low, at 1.1210, emerges as the next target. On the topside, Monday’s high, at 1.1420, and the top of the monthly range at 1.1480 represent the critical levels to surpass in order to alleviate bearish pressure.