EUR/USD Technical Analysis: Bearish Momentum Amid Hawkish Fed Shift

Market Overview and Fed Policy Impact

The EUR/USD pair has experienced a significant decline, shedding 200 points over the past two trading sessions. This downward move follows the conclusion of the June 2026 FOMC meeting, where the Federal Reserve delivered a more hawkish outcome than market participants had anticipated.

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While initial market consensus expected minimal monetary tightening for the remainder of the year, the updated Fed dot plot signaled potential for two to three additional rate hikes. With only four meetings remaining in 2026, the prospect of an aggressive policy path has bolstered the U.S. dollar, effectively overriding previous market optimism.

Geopolitical Factors and Price Action

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Geopolitical tensions, particularly regarding the situation in the Middle East, have receded into the background following the reported signing of a ceasefire memorandum between Washington and Tehran. Despite these eased tensions—which typically would weigh on the safe-haven dollar—the currency has maintained its upward momentum due to the Fed's hawkish shift.

The euro has struggled to find support, even after the European Central Bank's recent rate hike decision, which was largely sidelined by market participants. Currently, bearish sentiment remains in control as the market processes the implications of a sustained high-interest-rate environment in the United States.

Technical Outlook and Trading Strategy

From a technical perspective, the pair continues to follow a bearish impulse that originated on April 17. While the broader long-term bullish trend remains intact, the immediate price action lacks confirmed buy signals. Current technical indicators suggest that the pair may test key liquidity levels near the lows observed in March and last August.

Traders are advised to exercise caution before establishing new long positions. It is recommended to wait for the current bearish correction to conclude and for clear bullish chart patterns to emerge. A new bearish imbalance is developing, which may provide potential opportunities for short positions in the coming week.

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