The Euro remains under pressure as increasingly hawkish signals from the Federal Reserve strengthen the US Dollar.

EUR/USD stays under pressure for a second consecutive session, hovering near 1.1610 during Asian trading hours. The pair weakens as the US Dollar holds firm amid growing expectations of a hawkish Federal Reserve stance. Meanwhile, extended energy supply disruptions caused by the ongoing conflict risk fueling US core inflation and consumer price expectations, potentially encouraging the Fed to maintain higher interest rates for longer.

Technical Analysis

On the five-minute chart, EUR/USD is trading at 1.1621, maintaining a slightly bearish intraday tone as it stays just below the daily opening level of 1.1626. This suggests that upside momentum remains limited while the market continues to absorb earlier selling activity. Meanwhile, the Stochastic RSI has rebounded from oversold conditions into the mid-30 range, indicating that bearish pressure is easing somewhat, although there is still no clear sign of a strong bullish reversal.

To the upside, the first resistance level appears near the daily open at 1.1626. A sustained move above this area would be required to improve the short-term outlook. With no significant nearby support levels visible in the provided data, traders may continue viewing minor pullbacks as vulnerable as long as the pair trades below the daily open. Current momentum indicators point more toward a limited corrective recovery rather than the start of a broader trend reversal.

On the daily chart, EUR/USD is trading around 1.1619 and retains a bearish near-term outlook, as price action remains below the 50-day Exponential Moving Average (EMA) at 1.1683 while hovering just above the 200-day EMA at 1.1618. This setup implies that rallies toward the 1.1680 region could continue to attract selling interest. At the same time, the Stochastic RSI has fallen deeply into oversold territory near 11, signaling that downside momentum may be becoming overstretched in the short term.

On the upside, the 50-day EMA around 1.1683 serves as the key resistance level, and continued trading beneath it would keep bearish pressure intact. On the downside, the 200-day EMA at 1.1618 acts as immediate support. A decisive daily close below this level could trigger another leg lower, whereas maintaining support above it may allow for a corrective rebound within the broader bearish structure.

Fundamental Analysis

A stronger outlook for the US economy is reinforcing expectations for tighter monetary policy and providing additional support for the US Dollar.

Federal Reserve officials remain cautious as they assess the future path of short-term interest rates. Although policymakers are currently keeping the federal funds rate unchanged, they are gradually stepping away from expectations of rate cuts and showing greater willingness to consider further rate hikes should inflation remain persistent.

Meanwhile, the administration of US President Donald Trump announced that Trump will officially swear in Kevin Warsh as Chair of the US Federal Reserve on Friday at the White House. Warsh replaces Jerome Powell, whose term expired Friday but who remained in the role temporarily during the transition period.

On the economic front, data from the US Department of Labor showed that Initial Jobless Claims declined by 3,000 to 209,000 in the second week of May, highlighting continued strength in the labor market. However, Continuing Jobless Claims edged higher to 1.782 million for the week ending May 9, compared with 1.776 million in the prior week.

The Euro weakened against the US Dollar after traders responded to an unexpected contraction in the Eurozone economy. Preliminary S&P Global PMI data released Thursday showed that business activity across the Euro Area contracted in May at the fastest pace since late 2023. The downturn was largely attributed to a conflict-driven rise in living costs, which weighed on services demand and pushed input price inflation to its highest level in three years.

Attention now turns to upcoming German economic releases, including the June GfK Consumer Confidence Survey, first-quarter GDP figures, and the IFO Business Climate Survey.