The pair remains under pressure below the 20-day EMA as Middle East tensions lift energy costs and cloud ECB rate hike prospects.
EUR/USD trades near 1.1600 in early European trading, slightly up but still close to Wednesday’s lows. The Euro faces broad selling pressure as rising energy prices, driven by Middle East tensions, reduce the appeal of oil-import-dependent economies like the Eurozone.
Investors remain divided over whether the European Central Bank will raise rates in its upcoming meeting, though discussions on tightening monetary policy are expected due to persistent inflation. May’s headline and core HICP inflation came in at 3.2% and 2.5% YoY, respectively. Meanwhile, the US Dollar Index holds near an eight-week high of 99.55, supported by stalled US-Iran negotiations.
Technical indicators suggest a bearish near-term outlook, with the pair below its 20-day EMA (1.1646) and the RSI at 43, signaling seller dominance. Markets now await Friday’s US Nonfarm Payrolls data for further direction.