EUR/USD pulled back toward its 1.1420 – 1.1435 support as the dollar firmed on a rally in oil markets and a drop in demand for risk assets. Stronger German industrial data offered little help, and the medium-term technical picture stays bearish while the pair holds below its 21-day moving average.
EUR/USD is testing the support level at 1.1420 – 1.1435 as the U.S. dollar gains ground and appetite for risk assets fades. The pullback followed attacks on vessels in the Strait of Hormuz that pushed traders toward the American currency.
Dollar strength and Hormuz drive the move
The dollar advanced as traders focused on the rally in oil markets. FXEmpire reported that an LNG carrier from Qatar was hit in the Strait of Hormuz and a Saudi oil tanker also suffered damage. That drop in demand for risk assets weighed on the euro, sending EUR/USD lower.
Stronger data from Germany did little to offset the pressure. German industrial production rose 0.9% month-over-month in May, well above the analyst consensus of 0.2%, yet the beat failed to reverse the pair's slide.
Bearish technicals below the 21-day average
The broader trend still leans downward over the medium and long term, with the pair settling around 1.1441 at the time of that analysis. Traders are watching the pair's 21-day moving average. That average has capped upward attempts since mid-May and continues to act as dynamic resistance.
While the price stays below that average, the most likely scenario is a decline to retest the June low at 1.1325, described as the most prominent target for July. Momentum indicators agree: the RSI is holding below 50 and the MACD remains in negative territory, though the downward push is weakening.
Rate outlook keeps pressure on the euro
The interest-rate picture continues to steer the pair. Markets now see a lower likelihood of the European Central Bank tightening policy further through the rest of 2026, especially after inflation data undershot expectations, and short-term European bond yields have eased.
On the dollar side, the recent U.S. jobs report came in weaker than markets expected, prompting investors to trim their bets on further Federal Reserve rate hikes this year. For now, the euro stays on the defensive, and a clear break above key resistance is what buyers need to change the picture.
Sources: FXEmpire, DailyForex
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