EUR/USD Slides from Multi-Year Highs as Fed Clashes with ECB Amid Stock Market Risk

EUR/USD (EURUSD) Price Faces Turning Point as Labor Data, Diverging Policies and Technical Breakdowns Collide

EUR/USD Slips Below 1.1800 as Dollar Recovers on US Job Strength and Powell's Pushback

The EUR/USD (EURUSD) pair has started a steep pullback after hitting multi-year highs near 1.1830. Strong U.S. economic indicators—including JOLTS job openings at 7.769 million, far exceeding the 7.3 million forecast—have injected new momentum into the U.S. dollar. The ISM Manufacturing PMI rose to 49.0 from 48.5, and the production sub-index surged to 50.3, indicating the first expansion since February. However, not all U.S. data was rosy: the employment sub-index fell, tempering optimism. Still, the net economic picture favors a firm dollar for now.

Fed Chair Jerome Powell used his speech in Sintra to reinforce a data-driven approach while defending the Fed's independence against political pressure from President Trump. Powell's remarks, bolstered by Treasury Secretary Bessent's acknowledgment that rate cuts could come by September, left markets pricing in a 75% probability of a cut this fall. For EUR/USD, this has capped further upside and fueled a move back toward support zones.

Euro Resilience Shaken by Unemployment Rise and Cautious ECB Rhetoric

Eurozone inflation continues to hover near the European Central Bank’s 2% target, with headline CPI ticking up to 2.0% and core CPI steady at 2.3%. Yet the labor market delivered a jolt. The Eurozone unemployment rate unexpectedly rose to 6.3% in May from a forecasted 6.2%. Germany’s jobless claims rose by 11K, under the 15K estimate, but the trend remains concerning. ECB officials Madis Muller, Olli Rehn, and Mario Centeno have started sounding alarms on persistent low inflation and soft labor metrics. Their dovish stance clashes with the Fed’s hawkish hesitancy and tilts the policy balance in favor of the dollar.

EUR/USD Technical Structure Breaks Under Weight of Dollar Revival

The technical setup for EUR/USD reflects growing weakness. After rallying 4% in June, the pair topped at 1.1830 and has since failed to hold above 1.1800. Price action is now forming a bearish Head & Shoulders pattern on the hourly chart, with the neckline at 1.1760 already under threat. A confirmed break below this level opens the door toward 1.1690, followed by dense support near 1.1650–1.1680. Momentum indicators confirm this shift. The RSI has slipped into bearish territory, and the pair is testing the lower bound of its recent ascending channel.

From a broader perspective, the 50-EMA at 1.1740 is a critical pivot, with the 200-EMA at 1.1598 providing medium-term trend support. A failure to reclaim the 1.1800–1.1830 zone risks triggering deeper corrective flows. On the upside, resistance levels at 1.1810 and 1.1850—backed by a 261.8% Fibonacci extension—could halt any bounce attempts.

ADP Jobs Data and Trump Tariff Risks Add to EUR/USD Volatility

U.S. ADP Employment Change data is due next and expected to show a gain of 95K jobs in June, up from 37K in May. With the labor market showing resilience, any beat could further boost the dollar. At the same time, traders remain on edge ahead of President Trump’s July 9 tariff deadline, which could unleash new inflationary pressure and roil rate cut bets. The Senate has already passed Trump’s $3.3 trillion "Big Beautiful Bill," setting up a fiscal showdown that markets may interpret as dollar negative—unless offset by labor strength.

Across the Atlantic, ECB President Christine Lagarde is scheduled to speak again at the Sintra Summit, although few expect her to deviate from the dovish tone. Meanwhile, German manufacturing PMI edged up to 49.5, its highest level in three years, yet still below the 50 threshold. The Euro’s macro resilience remains unconvincing given the weak labor readings and cautious central bank stance.

Verdict on EUR/USD (EURUSD): SELL

EUR/USD shows increasing technical deterioration and faces growing macro pressure from stronger U.S. data and dovish ECB signals. As long as the pair fails to close decisively above 1.1830, the path of least resistance remains downward. A break below 1.1760 puts 1.1690 in play. With bearish RSI divergence, soft Eurozone jobs data, and Powell reiterating a delayed Fed pivot, the fundamental and technical setups align for further downside. EUR/USD = SELL unless 1.1830 breaks with conviction and U.S. macro weakens significantly.

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