The EURUSD pair is now entering a turbulent phase, with a primarily bearish tilt. This outlook is shaped by the latest US labor market report and the upcoming central bank meetings in June.
Friday’s robust Nonfarm Payrolls (+172,000 new jobs) solidified the dollar’s confident position, as the market has begun to price in the possibility that the Federal Reserve (Fed) will keep interest rates higher for longer—or even raise them further by the end of the year.
At the June 16–17 meeting, however, no changes are expected from the American regulator, now chaired by Kevin Warsh. Borrowing costs should stay in the 3.50%–3.75% range. But the surprisingly resilient labor market and stubborn inflation—next week’s release is projected to show a rise to 4.2%—are forcing the Fed to maintain a strict stance. In this scenario, the dollar finds support as a higher-yielding currency, which limits the euro’s potential to rally above 1.1650.
Meanwhile, there is a 98% probability that the European Central Bank (ECB) will increase its deposit rate by 25 basis points to 2.25% on June 11. Surging consumer prices (3.00% in April), driven by the energy shock from the Middle East conflict, have left the regulator with no choice but to tighten monetary policy. This fact, however, does little to help the euro, as the region’s GDP remains weak (-0.2% in the first quarter) in contrast to the resilient US economy.
Now, a few words on the 2026 outlook. The current balance of power in the “rate race” favors the dollar. Although the ECB is determined to raise borrowing costs, the Fed is keeping them way higher, maintaining a wide interest rate differential. From a technical standpoint, the pair has recently breached key support and is now trading near 1.1518. In the short run, the 1.1480–1.1450 range is likely to be tested. If US inflation comes in above forecasts, EURUSD could drop to 1.1400. A recovery is feasible only if Christine Lagarde makes extremely hawkish comments regarding a series of further rate hikes—a scenario that could allow the euro to return to the 1.1600–1.1680 area.
The overall recommendation is to sell EURUSD. Profits should be taken at 1.1450. Stop Loss could be set at 1.1560.
The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
