EUR/USD Forecast: ECB Holds Rates as 1.1360 Support Comes Into Focus

The European Central Bank’s monetary policy decision was the main event for the euro this week. The regulator kept the deposit facility rate unchanged at 2.25%, the main refinancing operations rate at 2.40% and the marginal lending facility rate at 2.65%. The slowdown in June inflation provided the ECB with additional room to maintain its current policy stance, particularly amid expectations that oil and petroleum product supplies through the Strait of Hormuz could gradually stabilise. Investors’ attention is now focused on the ECB leadership’s press conference for signals regarding the future path of borrowing costs and any reassessment of inflation risks if energy prices remain elevated for an extended period. Despite the gradual easing of price pressures, economic activity in the euro area remains vulnerable: the manufacturing sector is showing only a limited recovery, while GDP growth remains close to its weakest levels in recent years.

The US dollar is also showing volatile dynamics, with the USD Index trading near 100.7 and approaching its June highs as expectations of a diplomatic resolution to the Middle East conflict decline. Further escalation is supporting demand for dollar-denominated assets, which are traditionally viewed as a store of value during periods of heightened uncertainty. Investors are also monitoring the Republican administration’s return to a more restrictive trade policy. New tariff initiatives targeting major trading partners are reviving concerns about a repeat of broad trade restrictions that could put pressure on global supply chains and corporate investment. The previous escalation of trade tensions was accompanied by significant uncertainty for businesses, higher costs and weaker expectations for economic activity.

Support and Resistance Levels

On the daily chart, the pair is attempting to move away from the resistance line of a local descending channel with boundaries at 1.1460–1.1360.

Technical indicators have not yet reversed and continue to strengthen the sell signal generated in late May. The fast EMAs of the Alligator indicator remain below the signal line and are beginning to widen, while the Awesome Oscillator histogram is forming corrective bars in negative territory.

Support levels: 1.1360, 1.1220.

Resistance levels: 1.1460, 1.1610.

EUR/USD Trading Scenarios and Price Forecast

Short positions may be opened after the price consolidates below 1.1360, with a target at 1.1220 and a stop-loss at 1.1440. Estimated implementation period: seven days or more. Long positions may be opened after the price consolidates above 1.1460, with a target at 1.1610 and a stop-loss at 1.1380.