EURUSD is poised to decline if Fed proves to be hawkish

The EURUSD pair continues to recover, hovering around 1.16085. The upside unfolded in two stages. The first boost came from the European Central Bank’s (ECB) decision to raise interest rates. The second pillar of support was the long-awaited agreement between the United States and Iran, which reduced the dollar’s appeal as a safe-haven asset.

However, the positive impact of these factors has been rather limited. Why? The ECB’s rate hike had already been priced in by the market. Moreover, further hawkish moves could raise recession risks due to the region’s anemic economic performance. The next monetary decision is not expected until September. As for the US-Iran peace agreement, only a memorandum of understanding has been signed so far, with the official ceremony scheduled for Friday. For now, key questions remain unresolved, and it will take months—not weeks—for oil flows to fully recover. Elevated inflation is not going anywhere either.

Under these circumstances, the Federal Reserve’s (Fed) meeting on June 16–17 (now chaired by Kevin Warsh) is drawing a lot of attention. Interest rates are highly likely to stay in the 3.50%–3.75% range, but market participants are far more interested in the regulator’s monetary outlook. In May, US inflation surged to 4.2%, while production prices jumped by 6.5% year-over-year. Given these data, borrowing costs are bound to rise in 2026. Warsh’s hawkish posture could provide the dollar with significant support, weighing on EURUSD.

From a technical standpoint, the pair is recovering from a downtrend. It has recently rebounded from 1.14990 and is now trading near 1.16085. The Chaikin Oscillator is rising, though it remains in negative territory—a clear sign of reviving buying interest. Prices are currently approaching the EMA200 (1.16453) and EMA100 (1.16560), where they could face resistance.

Take into account the following trading plan:

Sell EURUSD from 1.16100. Place Take profit at 1.15200 and Stop loss at 1.16700.

This forecast remains relevant between June 15 and June 22, 2026.