EURUSD may be bottoming after four sessions of declines

During morning trading on May 18, the EURUSD pair is hovering near 1.16190, stuck close to its weakest level in five weeks. The latest selloff was triggered by renewed tensions surrounding the Strait of Hormuz—a rude awakening that crushed fragile hopes for a quick ceasefire and sent capital pouring back into safe havens, with the dollar acting as the top beneficiary. 

Inflation fears have recently forced the Federal Reserve (Fed) to rethink its game plan. Markets are now betting on a roughly 75% chance of a rate hike by December. Meanwhile, 10‑year yields have shot up to 4.607%—a one‑year peak. But here's the thing: much of this hawkish shift has already been priced in. Thus, pressure on the pair is starting to fade, at least in the short term. 

Across the Atlantic, the European Central Bank (ECB) is also sharpening its tools. About 85% of economists polled by Reuters expect the regulator to raise borrowing costs by 25 basis points as early as June. Such a convergence in policy expectations is giving the single currency a firmer footing. Add falling hedging costs to the equation, and the outlook turns even more compelling. Morgan Stanley estimates that this could unlock over $200 billion in euro inflows, with the bank eyeing 1.23 on EURUSD by the third quarter.

On the technical side, the daily chart tells a story of exhaustion and a potential reversal. After four consecutive down days, during which the price touched a local low at 1.16073, the pair is now flashing early signs of bottoming out and attempting to rebound. The Chaikin Oscillator, though still negative, has stopped sliding—a subtle signal that selling pressure is easing. At the same time, the Stochastic Indicator has plunged into oversold territory, suggesting that bearish momentum is running on empty and a recovery could be just around the corner. 

For those ready to make a move, pay attention to the trading plan down below:

Buy EURUSD at the current price. Place Take profit at 1.17050. Set Stop loss at 1.15900.

This forecast holds true from May 18 till May 25, 2026.