EURUSD sell-off comes into play as ECB meeting looms

The EURUSD pair is currently feeling the heat. A flight to safety, fueled by escalating US-Iran tensions and Brent crude punching through $90 per barrel, keeps the euro on the back foot. 

The big moment for the single currency will arrive on July 23, when the European Central Bank (ECB) plans to take center stage with its policy decision. Following a 25-basis-point interest rate hike in June, the market expects the regulator to hold at 2.40%. Although eurozone inflation has eased from 3.2% to 2.8%, it is still uncomfortably above the 2% target—and with oil prices roaring back, the threat of another spike is very real. This puts ECB President Christine Lagarde in a tight spot. She will likely need to talk tough and keep a September hike firmly on the table. But what is the problem? The regional economy is struggling too. GDP shrank by 0.2% in the first quarter, and the growth outlook for 2026 was reduced to a mere 0.5%. This makes any serious policy tightening a risky gamble.

Across the Atlantic, however, the picture is far rosier. The Federal Reserve (Fed) is holding borrowing costs at 3.75%, and economic activity is humming along. Inflation is still slightly above the target—June's consumer prices rose roughly 3.4% year‑on‑year—but this is not enough to prompt the regulator to adopt a dovish stance anytime soon. As a result, the interest rate differential remains firmly in the US corner. Throw in attractive Treasury yields and safe-haven demand, and the greenback is in a pretty sweet spot.

The final recommendation:

— Sell the EURUSD pair at the current price, targeting 1.12500 within one month.

— To shield your position if the market plays against us, place a Stop Loss order at 1.15000.