EUR/USD Nears Two-Week High as Fed Rate Expectations Ease While Technical Resistance Remains in Focus

EUR/USD is on track for its first weekly gain in three weeks, holding in the mid-1.1400s during Friday's Asian session as easing expectations for further Federal Reserve policy tightening continue to weigh on the US dollar. The pair briefly traded around 1.1470–1.1475 earlier this week, marking a near two-week high, before easing slightly, according to Trading Economics data.

What's Driving the Move

The US dollar weakened following Thursday's softer-than-expected US employment report, which showed 57,000 jobs added in June, compared with the market consensus of approximately 110,000. The data prompted market participants to scale back expectations for additional Federal Reserve policy tightening this year.

However, gains in the euro have also been moderated by softer inflation data from the euro area. Headline inflation slowed to 2.8% in June from 3.2% in May, while core inflation eased to 2.4%, both according to the data cited.

Speaking at the ECB Forum in Sintra, ECB President Christine Lagarde said risks to euro area inflation and economic growth had diminished, a comment that market participants generally interpreted as supportive of a less restrictive policy outlook.

Technical Picture: Resistance Continues to Limit the Recovery

EUR/USD has repeatedly encountered resistance near the 23.6% Fibonacci retracement of the April–June decline. The recent rejection near the upper boundary of the ascending channel has formed what some technical analysts identify as a bearish flag pattern beneath the 200-period Exponential Moving Average (EMA) on the four-hour chart.

This pattern is often interpreted as indicating that the broader downtrend could remain intact, although it does not by itself confirm the next directional move.

Meanwhile, the Relative Strength Index (RSI) remains near 60, while the MACD histogram continues to show modest positive momentum, suggesting improving but not yet conclusive bullish momentum.

A sustained move above the 23.6% Fibonacci retracement could strengthen the near-term technical outlook, while failure to break this resistance may leave the pair vulnerable to renewed selling pressure.

Key Levels to Watch

Resistance

1. 1.1466 – Upper boundary of the ascending channel
2. 1.1516 – 200-period EMA
3. 1.1525 – 38.2% Fibonacci retracement
4. 1.1587
5. 1.1649 – Additional Fibonacci resistance levels

Support

1. 1.1371 – Lower boundary of the ascending channel
2. 1.1325 – May 2025 low

Why It Matters for Southeast Asian Traders

The US dollar weakened broadly during the week, falling by more than 1% against both the British pound and the New Zealand dollar, according to FXStreet's currency heat map, highlighting that recent EUR/USD movements have reflected broad-based US dollar weakness as well as euro-specific developments.

With market expectations for both the Federal Reserve and the European Central Bank evolving, EUR/USD could continue trading within a range until new economic data or policy developments provide clearer market direction, with next week's US inflation data likely to be closely monitored by market participants.

Technical analysis and pricing data were sourced from FXStreet and Trading Economics. This content is provided for informational purposes only and does not constitute investment advice.1