EURUSD is now moving within a strong medium-term downtrend, with the market’s key driver being US economic outperformance, fueled by the artificial intelligence (AI) boom and robust labor statistics.
The Federal Reserve (Fed) remains committed to its hawkish stance and keeps believing in holding interest rates “higher for longer”. The median policy-rate projection could reach 4.1% by year-end and stay at this level throughout 2027.
By contrast, the European Central Bank’s (ECB) hands are tied due to the region’s weak GDP growth of just 0.9%, combined with ongoing political risks. Core inflation in the bloc sits at 2.6%—above the target—compelling the regulator to lean toward monetary tightening. However, the yield spread between US and German bonds continues to favor the greenback, with capital steadily flowing into more profitable dollar‑denominated assets.
From a technical standpoint, the 1.1400 level serves as a key consolidation zone. Failed tests of this resistance open the way for building up short positions. The nearest strong support lies between 1.1200 and 1.1100. If bearish momentum intensifies on resilient US macro data, EURUSD could test the 1.1300 mark in the near future.
A trend reversal and a gradual recovery of the euro could take place if the American economy slows down or the Fed softens its posture. However, current conservative forecasts from two regulators hint at a different scenario. Over the next six months, the pair will most likely remain in a wide downward channel, where any attempts by the euro to rise will be perceived by the market as a temporary correction.
The overall recommendation is to sell EURUSD. Profits should be taken at 1.1300. Stop Loss could be set at 1.1417.
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.
