Short-Term Rally May Offer Selling Opportunities at Higher Levels

Summary:

The implementation of the U.S.-Iran agreement could reduce the likelihood of further Fed rate hikes, prompting policymakers to adopt a wait-and-see approach or even soften their hawkish guidance, which would weigh on the U.S. dollar. However, market uncertainty surrounding the incoming Fed Chair may limit the euro's upside in the short term.

SELL EURUSD

EXP

PENDING

1.16183

Entry Price

1.14927

1.16535

1.15967 +0.00079 +0.07%

Pips

PENDING

1.14927

Exit Price

1.16183

Entry Price

1.16535

Fundamentals

EUR/USD rebounded after dipping slightly at the open and is currently trading around the 1.1604 level. The move is largely driven by the implementation of the U.S.-Iran agreement, which has led markets to believe that the worst phase of U.S. inflation may have already passed.

U.S. inflation accelerated to its highest level in more than three years in May, with energy prices being the main driver. However, oil prices have retreated following the agreement, and the overall downward trend in energy prices has become increasingly evident. Markets have begun to expect inflation to gradually return to levels seen before the conflict.

A stabilization in inflation implies that the Federal Reserve may abandon the possibility of further rate hikes, opting instead to remain on hold or even tone down its hawkish guidance. Such a shift would be negative for the U.S. dollar.

However, the market still has very limited visibility regarding the policy stance of incoming Fed Chair Kevin Warsh. Investors are unable to accurately assess how he would react to key economic developments such as accelerating employment growth and rising inflation, nor can they clearly gauge his approach to interest-rate management.

As a result, market participants are likely to adopt a cautious stance on policy expectations. This suggests that the downside potential for the U.S. dollar may remain limited ahead of the upcoming Fed interest-rate decision. Consequently, EUR/USD could experience a volatile pattern characterized by an initial rise followed by a pullback.

Technical Analysis

From a timeline perspective, EUR/USD's price action can be divided into three phases.

The first phase spans from June 2025 to the present, during which the pair has traded in a broad range between 1.1856 and 1.1418.

The second phase began around mid-April and continues today, with EUR/USD moving within a descending channel.

The third phase started in mid-May, during which the pair has fluctuated within a narrower range between 1.1586 and 1.1661.

After previously breaking below the consolidation range, EUR/USD hovered near the lower boundary of the descending channel before rebounding. The pair has now returned to the previous range, although whether it can firmly establish itself above this area remains to be seen.

From the Ichimoku perspective, both the Base Line and Conversion Line are moving sideways, with the Conversion Line positioned above the Base Line. The current price remains above the Conversion Line, suggesting that EUR/USD may continue to edge higher in the near term before eventually turning lower.

In the ADX indicator, the ADX line is declining, indicating weakening bearish momentum. However, with the ADX still near the 19 level, the room for further declines in the indicator appears limited, implying that a rebound in momentum could emerge.

Meanwhile, the -DI line has crossed below the +DI line and stands near 13.7, while the +DI line is rising noticeably. This suggests that EUR/USD still has room for a modest short-term advance before resuming its decline. Short-Term Rally May Offer Selling Opportunities at Higher Levels_1

Short-Term Rally May Offer Selling Opportunities at Higher Levels_1

Short-Term Rally May Offer Selling Opportunities at Higher Levels_2

Trading Recommendation

Direction: Short

Entry Price: 1.16183

Target Price: 1.14927

Stop Loss: 1.16535

Support Levels: 1.15866, 1.15223, 1.14827

Resistance Levels: 1.16183, 1.16618

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education

Data